{"id":4402,"date":"2015-12-01T06:42:52","date_gmt":"2015-12-01T11:42:52","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=4402"},"modified":"2023-01-24T23:14:13","modified_gmt":"2023-01-25T04:14:13","slug":"2-ways-explosive-stocks","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/2-ways-explosive-stocks\/","title":{"rendered":"2 Simple Techniques To Find The Next Explosive Stock On Your Watchlist"},"content":{"rendered":"<figure id=\"attachment_4403\" aria-describedby=\"caption-attachment-4403\" style=\"width: 259px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4403\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2015\/12\/images.jpg\" alt=\"Looking for a moonshot stock?\" width=\"259\" height=\"194\" title=\"\"><figcaption id=\"caption-attachment-4403\" class=\"wp-caption-text\">Looking for a moonshot stock?<\/figcaption><\/figure>\n<p>Anyone with just the smallest amount of stock trading experience knows&nbsp;it is&nbsp;impossible to predict exactly which stock out of an already narrowed-down&nbsp;watchlist will be the one&nbsp;that blasts off during the next market rally.<\/p>\n<p>However, there are two basic, yet&nbsp;extremely effective strategies to stack the odds of finding the biggest-gaining stocks&nbsp;in your favor. Continue reading to learn more, including an example of an actual <em><a href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">Wagner Daily<\/a><\/em> stock trade that fits the criteria&#8230;<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/2-ways-explosive-stocks\/#1_Relative_Strength_%E2%80%93_A_Rock_Solid_Basis\" >1) Relative Strength &#8211; A Rock Solid Basis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/2-ways-explosive-stocks\/#2_Multiple_Time_Frame_Analysis_%E2%80%93_Seeing_The_%E2%80%9CBig_Picture%E2%80%9D\" >2) Multiple Time Frame Analysis &#8211; Seeing The &#8220;Big Picture&#8221;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/2-ways-explosive-stocks\/#Omega_Protein_OME_%E2%80%93_Walking_the_Talk\" >Omega Protein ($OME) &#8211; Walking the Talk<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"1_Relative_Strength_%E2%80%93_A_Rock_Solid_Basis\"><\/span><strong>1) Relative Strength &#8211; A Rock Solid Basis<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Relative strength is the foundation of all our <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">stock scanning<\/a>, and is also the core of the strategy discussed in my <a href=\"https:\/\/www.amazon.com\/dp\/1118109139?tag=morptradgrou-20&amp;camp=14573&amp;creative=327641&amp;linkCode=as1&amp;creativeASIN=1118109139&amp;adid=00HPD75G7SPM18CG0N4Y&amp;&amp;ref-refURL=http%3A%2F%2Flocalhost%3A2876%2Fabout-us\" target=\"_blank\" rel=\"noopener\">ETF trading book<\/a>.<\/p>\n<p>Our version of Relative Strength (RS), not to be confused with the Relative Strength Index (RSI), ranks&nbsp;stocks that have outperformed 80% of <em>all<\/em> stocks in the market over a 6 or 12 month period.<\/p>\n<p>Once a basic watchlist with high relative strength stocks has been created, the next step is to narrow down the list by searching for the best weekly and monthly (long-term) stock chart patterns. You should also look for bullish volume patterns on those same charts (high accumulation with little distribution).<\/p>\n<p>After your list of the top swing trade candidates&nbsp;has been defined, the last step is to rank the list by&nbsp;industry group&nbsp;relative strength, quarterly earnings growth percentage (<a href=\"https:\/\/www.investors.com\/Education\/Lesson.aspx?id=735736&amp;sourceid=735749\" target=\"_blank\" rel=\"noopener\">IBD<\/a>&nbsp;is a great resource for this, as well as group RS), and quality of chart pattern by using <em>multiple time frame analysis<\/em>.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Multiple_Time_Frame_Analysis_%E2%80%93_Seeing_The_%E2%80%9CBig_Picture%E2%80%9D\"><\/span><strong>2) Multiple Time Frame Analysis &#8211; Seeing The &#8220;Big Picture&#8221;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Multiple time frame analysis is a simple, but often overlooked concept because many new traders focus on price patterns over just a 3-4 week period on a typical daily&nbsp;chart interval.<\/p>\n<p>But one&nbsp;of the key tenets of technical analysis is that the&nbsp;longer the base of support, the more powerful&nbsp;the eventual rally&nbsp;higher will be. As such, traders who ignore the longer-term weekly and monthly charts usually miss one of the most important factors of a bullish chart pattern.<\/p>\n<p>With that in mind, your scanning process should be focused on stocks that are either breaking out from a longer-term base <em>OR&nbsp;<\/em>have recently broken out from such a base and are consolidating for the first time.<\/p>\n<p>Generally speaking, the earlier you&nbsp;can identify a low-risk entry point in a trend, the better your chance&nbsp;of finding an explosive mover to hold for an super-sized&nbsp;gain, especially when price action is confirmed by volume, industry group relative strength, and strong quarterly earnings growth.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Omega_Protein_OME_%E2%80%93_Walking_the_Talk\"><\/span><strong>Omega Protein ($OME) &#8211; Walking the Talk<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>With a&nbsp;share&nbsp;price <strong>gain of approx.&nbsp;30% within just the past six weeks,<\/strong> Omega Protein ($OME) is a solid example of a stock that is early in its trend and is breaking out on multiple time frames.<\/p>\n<p>With a relative strength rating of well over 90 at the time of our entry, $OME was already showing a ton of relative strength by setting higher lows all summer while the broad market sold off.<\/p>\n<p>$OME originally caught our attention on October 19, when it cleared the highs of a the current trading range on heavier than average volume.<\/p>\n<p>We then gave details of the buy setup (trigger, stop, and target prices) to subscribers of our <strong><a href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">swing trading newsletter<\/a><\/strong> the following day.<\/p>\n<p>After buying on a slight pullback on October 20,&nbsp;the breakout initially failed to hold and the price slid down to key support of its 50-day moving average.<\/p>\n<p>But knowing that the first breakout attempt of a stock is not always successful, we held firm with our stop in place (&#8220;set it and forget it&#8221; just below the 50-day MA).<\/p>\n<p>After a week or so of choppy price action, $OME gapped sharply higher on big volume, in response to earnings on November 5 (remember the importance of strong earnings growth), then followed through the next day with another strong advance on volume that was about 300% greater than average.<\/p>\n<p>The daily chart below details the action:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/151108OME3.png\" alt=\"$OME DAILY \" title=\"\"><\/p>\n\n\n<p><iframe loading=\"lazy\" width=\"580\" height=\"680\" src=\"https:\/\/4966a6ff.sibforms.com\/serve\/MUIFAOyl4S5Qdajs7q3LemJKudDbMHB24p2SAorKuWWuauy3e1eFPtLgTh5BoPCh3XzIz3rZE_YyIqvc9IEl_xMkRg3MTlG0Zn5eqY3J2eKMjOE-jPuS43ZXewKssUaGt1kllR56wV2u1lBXoYfKSzEgeeTjLyjdSao87VmqsbDtgcy4jNwHMSzf0Rl346rIoBjtZwf-DX0V6tbn\" frameborder=\"0\" scrolling=\"auto\" allowfullscreen style=\"display: block;margin-left: auto;margin-right: auto;max-width: 100%;\"><\/iframe><\/p>\n\n\n<p>The longer-term weekly chart below&nbsp;shows a strong breakout from a tight trading range above the rising 10-week moving average (blue line).<\/p>\n<p>The strong price and volume action on the daily chart was confirmed by the same on the weekly chart, with last week&#8217;s wide candle on big volume:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/151108OME2.png\" alt=\"$OME WEEKLY\" title=\"\"><\/p>\n<p>Depending on your&nbsp;screen resolution, a weekly chart may have included enough price action to show the summer breakout above the highs of 2011 and 2014 at $16, which by itself is a very positive sign.<\/p>\n<p>However, using multiple time frame analysis to assess the monthly chart below is what truly separates the chart of $OME from others, as we now see the&nbsp;recent breakout to a new 52-week high was also a breakout to a fresh&nbsp;<em>all-time high, <\/em>as well as a breakout from&nbsp;a massive 17-year long consolidation:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/151108OME1.png\" alt=\"$OME MONTHLY\" title=\"\"><\/p>\n<p>Riding an&nbsp;unrealized gain of roughly 30% since our $18.85 entry into $OME, the model portfolio of the <em><a href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">Wagner Daily<\/a><\/em> newsletter is benefiting nicely from this stock with no overhead resistance.<\/p>\n<p>Nevertheless, we never forget that carefully raising the protective stop along the way is the key to maximizing the gain, while minimizing the risk of giving back the profit.<\/p>\n<p><em>We&#8217;d love to hear your thoughts on this article, so please drop us a line&nbsp;below.<\/em><\/p>\n<div class=\"cfmonitor\" style=\"padding-top: 30px;\"><center><script src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\" async=\"\"><\/script><!-- Footer of content - Large --> <ins class=\"adsbygoogle\" style=\"display: inline-block; width: 336px; height: 280px;\" data-ad-client=\"ca-pub-7565144363001883\" data-ad-slot=\"6017996961\"><\/ins><script>\/\/ <![CDATA[\n(adsbygoogle = window.adsbygoogle || []).push({});<br \/>\n\/\/ ]]><\/script><\/center><\/div>","protected":false},"excerpt":{"rendered":"<p>Anyone with just the smallest amount of stock trading experience knows&nbsp;it is&nbsp;impossible to predict exactly which stock out of an already narrowed-down&nbsp;watchlist will be the one&nbsp;that blasts off during the next market rally. However, there are two basic, yet&nbsp;extremely effective strategies to stack the odds of finding the biggest-gaining stocks&nbsp;in your favor. Continue reading to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-4402","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4402","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=4402"}],"version-history":[{"count":2,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4402\/revisions"}],"predecessor-version":[{"id":15720,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4402\/revisions\/15720"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=4402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=4402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=4402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}