Zacks.com Featured Highlights Include: Vale, Fibria, TechTarget And CBIZ
Zacks Investment Research | Feb 21, 2018 09:12PM ET
For Immediate Release
Chicago, IL – February 22, 2018 - Stocks in this week’s article Vale S.A. (NYSE:VALE) , Fibria Celulose S.A. (NYSE:FBR) , TechTarget, Inc. (NASDAQ:TTGT) and CBIZ, Inc. (NYSE:CBZ) .
4 Affordable Breakout Stocks for Stupendous Returns
Selecting breakout stocks is probably one of the most favored techniques among active investors. The idea behind this kind of stock selection is to determine which stocks are trading within a narrow channel. These stocks are to be bought as soon as they move above this band and sold when they fall below. In case a stock moves above this band, it usually gains momentum.
However, market watchers warn against incorrectly timing such a move. This is because of the significant risk of identifying stock movements as breakouts, which in reality are not so. At the same time, when this strategy is utilized judiciously, it yields substantive gains, which is the reason why it remains popular.
Spotting a Breakout Stock
The first step to selecting the right breakout stock is to calculate its support and resistance level. A support level is the lower bound for stock movement while a resistance level refers to the maximum price which it trades within over a considerable period.
In other words, demand for a stock is at its lowest at its support level, which means most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, which means that they would like to add them to their portfolios. The key to identifying breakout stocks is to zero in on those that are on the verge of a breakout or those that have just broken above the resistance level.
Identifying Whether It’s for Real
Stocks which have breached their resistance level should ideally be in high demand among traders. But the test of whether this is a genuine breakout is when they go on to attain higher prices and the old barrier becomes a new support. This is why it is important to determine whether a long-term price trend is about to emerge.
Only a study of long-term trends can determine whether the existing trading channel has been breached effectively. This indicates the strength of the support or resistance levels. If you can identify the effective channel for a stock, picking it even at a not-so-reasonable price would lead to significant returns.
For the rest of this Screen of the Week article please visit Zacks.com at: Zacks Investment Research
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