- Buying breakout stocks on a dip is a great way to enter positions and potentially make short-term profits.
- This post identifies 3 digital transformation breakout stocks have pulled back to previous 52-week high.
- Don’t forget to check out my Digital Transformation marketplace service which offers four end-of-week stock portfolios of high-growth software stocks.
'Power Dips' is a strategy for entering a stock position based on breakout to a 52-week high followed by a pullback to the support level which was the previous high prior to the breakout. This is a short-term speculative strategy and the strategy identifies what may be an optimal entry point, but does not consider other factors that may be of interest to the investor, such as company fundamentals, and overall market conditions. I am only identifying stocks with optimal entry points, not providing exit signals.
Notice! I am providing all patterns that meet the above criteria. However, I find that the best trade signals come when there is a large bullish trend followed by swift and fairly large pullback to the support level. When the bullish trend is not impressive or the pullback is slow there is a high chance that the support will be breached with further downside.
Power Dips for Dec 9, 2020
All stock charts are provided by Yahoo Finance.
Alarm.com Holdings, Inc. (ALRM)
Note: ALRM is in the portfolio Steve’s Picks.
Cloudflare, Inc. (NET)
Note: NET is in the portfolios SKYY-Light and HACK-Less
Silvergate Capital Corporation (SI)
About Digital Transformation, the Marketplace Service
The Digital Transformation marketplace service was started at the beginning of 2020 and currently offers four 10-stock portfolios that are updated on a weekly basis. Three of the portfolios have stock holdings that are determined by quantitative analysis, primarily based on sales growth, consistency of growth, sales surprises, and lowest operational leverage. The fourth portfolio is based on the author's discretionary picks.
The performance statistics provided below are hypothetical and no claim is made that any investor would have achieved the same or similar results. The author of this service believes that the results are reflective of practical usage, including slippage and commission but results might vary on an individual basis.
There is no guarantee or promise of future performance which will be very dependent on, among other factors, the continued bullish trend in software stocks. This is a very volatile market sector and risk is high. The author is not a financial or investment advisor and does not provide individual advice to investors. Please consult a financial advisor prior to using a service such as Digital Transformation.
Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.