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New
Kid on the Block - Examples
This stock showed up on my New Kid on
the Block Scan when it was trading at 28 and was on pace
to trade higher than average volume. What I liked about
this setup was that the stock has consolidated for three
weeks and was finally breaking out through resistance.
This is the first day of the move. The way I trade
stocks that come up on this scan and are breaking out to
new highs is to start with a small position. More often
than not, these stocks would sell off at the end of the
day. At that point, I would look to add to my position.
My trailing stop management utilizing this scan is to
place a stop loss for 60%-80% of my position below the
previous day’s low. I would like to hang on to 20% of
my position for as long as I can as long as the overall
environment for the market, industry, and my stock
remains bullish. You never know when you find the
future Wall Street darling.
Stock sold off at the end of the day, but the volume
spike would normally alert speculators who run overnight
scans to this stock. More often than not, there is going
to be some interest the following day.
Stock traded up to 40. It was up about
43% since it came up on my New Kid on the Block Scan six
days ago. As you can see in the chart, the stock did not
take out the low made on the previous day, so if you
were using my trailing stop methodology, you would have
been able to stay in the trade through day-six. You can
also see in the chart that the volume has increased
drastically as Wall Street was discovering this “New
Kid.”
This stock showed up on my New Kid on
the Block Scan when it was trading at 15.25 and was well
on pace to trade higher than average volume. What I
liked about this setup was that the stock has
considerably declined in price. It was now going up on
very high volume. This is the first day of the move. The
stock trades up to 23.50. It is up 54% since we found it
on our scan. This would be a good time to take profits
on 80%-90% of the position and hold the rest.
Stock pulls back over the next two days and
gives back about 50% of the move it made from the low of the
day. It then rallies back up and hits 29.75. This scan has
enabled me to find this stock early enough in the day.
One of the hidden values that the New Kid
on the Block Scan has is that it finds stocks that are moving
on good news in real-time. If a stock releases good news and
it trades with the news, this scan should pick it up if the
stock meets all the other search criteria.
The following charts show additional
stocks that showed up on this scan. The arrows will point
to the day it showed up on the scan.
This stock showed up on this scan after
it consolidated for about two weeks. The powerful move
on high volume was a great signal to enter a long
position.
About two weeks after this stock showed
up on the scan, it showed up again. As you can see in
the above chart, the stock pulled back from the highs it
made after the first time it showed up on the scan on
relatively low volume. As soon as volume picked up
again, the New Kid on the Block Scan was able to find
the stock and alert me to it. The stock moved up sharply
in price over the next three days.
The above chart shows a similar pattern.
This stock showed up on the scan twice within two weeks.
Just like the previous example, this stock pulled back
from the first top it made after the first time it showed
up on the scan on low relative volume. The New Kid on the
Block Scan was able to find it on the day the volume
picked up again and just before it made its explosive move
up.
You should all be aware
of the problems this scan might represent you with.
The first thing you should be aware of is
that if a chatroom or a message-board is pumping a thin stock,
it would show up on this scan. Consequently, you must use
extreme caution.
Next, if any market participant manipulates
the stock by painting the tape, it would also show up on the
scan. Although this practice is illegal, it could still
happen. You must be careful.
Then, if a block trade takes place for a
thinly traded stock, it may result that the stock would show
up on the scan. You must make sure that the volume on your
RealTick® intraday chart is displayed. To do
so press the F4 key and check the box next to “show
volume.” Once you have volume on the intraday chart, you
must make sure that the volume has been steady throughout the
trading day.
Finally, this scan would also catch stocks
that are moving on rumors. This could be dangerous if the
rumors turned out to be false. To be on the safe side, you
should take relative small positions in the stocks that show
up on this scan.
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