Trading the PR Breakout
When traded correctly, the PR breakout is a powerful setup. Like an earnings breakout, it combines a fundamental catalyst with a strong technical pattern. IPOs are a particularly profitable subset of this group; there’s always excitement surrounding recent IPOs, as everyone wants to get in on the ground floor with the next Apple or Google. This excitement means traders come pouring in when there’s any kind of positive news, driving the stock up even further. A final feature that can add even more gas to the fire is a stock that’s making new highs. By new highs, I mean that it’s at a higher price than it ever has been before. This matters because there’s no resistance – no supply overhead to push the stock back down.
This week we had a PR breakout that met the usual criteria and was also an IPO making new highs – $CLCD. As usual, I waited for a strong intraday setup for my entry. The stock had gapped up, held support, and consolidated nicely, so I bought 1000 shares at $18.20.
Then I made a mistake. It went up to $19, but then down to $18. I sold out at a small loss. The reason this was a mistake was that it never broke below price support or the 9 EMA. I quickly realized I had jumped the gun, as shortly thereafter it began consolidating more tightly, which is a sign of an impending breakout. I added again at $18.50, and sold a partial position at $19, and some more at $20. Once again, it consolidated and I added more shares. This time, it really ran, and I sold the last of my shares at $25.50.
This was a great setup that played out beautifully. I made a nice profit, but would have done better if I’d stuck to my original stop loss plan. For more info on this trade, check out the video below, or hit me up at firstname.lastname@example.org!