{"id":5243,"date":"2018-05-23T06:07:25","date_gmt":"2018-05-23T10:07:25","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=5243"},"modified":"2022-04-06T15:04:59","modified_gmt":"2022-04-06T19:04:59","slug":"monthly-stock-charts","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/","title":{"rendered":"How To Predict Explosive Breakouts With Monthly Stock Charts"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-5244\" title=\"monthly charts for swing trading\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2018\/05\/long-term-monthly-charts-250x300.jpg\" alt=\"long-term monthly chart breakouts\" width=\"600\" height=\"720\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2018\/05\/long-term-monthly-charts-250x300.jpg 250w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2018\/05\/long-term-monthly-charts-92x110.jpg 92w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/p>\n<h1>Many new and experienced swing traders make the mistake of focusing only on short-term daily charts when scanning for new trading opportunities.<\/h1>\n<p>While daily charts are great for locating low-risk entry points, the limited price history is not very useful when narrowing down a list of potential buy candidates.<\/p>\n<p>This is where long-term <em>monthly<\/em> stock charts shine by offering massive insight in just a quick glance &#8212; without adding too much time to the scanning process.<\/p>\n<p>In this article, you will learn a few simple rules to easily find monthly chart patterns that often lead to <strong>powerful rallies of 50% to 100% or more in as little as three to six months.<\/strong><\/p>\n<p>Continue reading to discover how to predict explosive breakouts with monthly stock charts, and with three examples of real trades that led to huge gains in a short period.<\/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-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/#The_Sweet_Spot\" >The Sweet Spot<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/#Applied_Optoelectronics_AAOI\" >Applied Optoelectronics ($AAOI)<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/#200_gain_in_6_months\" >+200% gain in 6 months<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/#Alibaba_BABA\" >Alibaba ($BABA)<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/#80_gain_in_3_months\" >+80% gain in 3 months<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/#Corcept_Therapeutics_CORT\" >Corcept Therapeutics ($CORT)<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/#50_rally_in_3_months\" >+50% rally in 3 months<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/morpheustrading.com\/blog\/monthly-stock-charts\/#Odds_In_Your_Favor\" >Odds In Your Favor<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"The_Sweet_Spot\"><\/span>The Sweet Spot<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Monthly stock charts are a thing of beauty when they show a pattern that is <strong>three to five years in the making<\/strong> &#8212; such as a breakout to new-all time highs, or the first base to emerge after the break of a long-term downtrend line.<\/p>\n<p>When using monthly stock charts, we focus on finding stocks breaking out to <strong>new all-time highs for the first time in two to five years &#8212; the sweet spot,<\/strong> especially for stocks that have IPO\u2019d within the last 10 years.<\/p>\n<p>Identifying a bullish basing pattern on a daily or weekly stock chart is great, but breakouts become even more explosive when they correlate to new all-time highs on the monthly charts. This is especially true for stocks that:<\/p>\n<ul>\n<li>Have a minimum share price of $20<\/li>\n<li>Have a minimum average daily volume of at least 500,000 shares<\/li>\n<li>Belong to an industry sector with relative strength<\/li>\n<\/ul>\n<p>Following are a few examples of monthly stock charts that broke out to new all-time highs last year.<\/p>\n<p>Each stock below was an actual trade presented to subscribers in <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\"><em>The Wagner Daily<\/em><\/a>, our nightly swing trading newsletter.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Applied_Optoelectronics_AAOI\"><\/span>Applied Optoelectronics ($AAOI)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"200_gain_in_6_months\"><\/span><strong>+200% gain in 6 months<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Applied Optoelectronics ($AAOI) broke out to new all-time highs via a <a href=\"https:\/\/www.money-zine.com\/definitions\/investing-dictionary\/breakaway-gap\/\" target=\"_blank\" rel=\"noopener\">breakaway gap<\/a> in January 2017 on strong volume, a sure sign of institutional accumulation.<\/p>\n<p>The massive breakout followed three years of chop in the $8-$27 range and led to a 200% advance over a 6-month period.<\/p>\n<p>However, the \u201ceasy\u201d money was made during the first three months, prior to a nasty shakeout in month four of the breakout.<\/p>\n<p>In our <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">stock pick newsletter<\/a>, we locked in a 65% gain in less than 3 months:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2016\/180520AAOI.png\" alt=\"nasdaq daily \" title=\"\"><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Alibaba_BABA\"><\/span>Alibaba ($BABA)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"80_gain_in_3_months\"><\/span><strong>+80% gain in 3 months<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Starting in September of 2016, Alibaba ($BABA) began forming a bullish base on its monthly stock chart, just below its all-time high from 2014.<\/p>\n<p>After building the base for six months, $BABA broke out to a new all-time less than two months later.<\/p>\n<p>Alibaba zoomed from $120 to $200 after the breakout, thanks to a complete lack of resistance at new all-time highs.<\/p>\n<p>We bought $BABA around $106 (March 2017) and sold in the $149 area a few months later, scoring a +40% gain in <em><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">The Wagner Daily<\/a><\/em>:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2016\/180520BABA.png\" alt=\"nasdaq daily \" title=\"\"><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Corcept_Therapeutics_CORT\"><\/span>Corcept Therapeutics ($CORT)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"50_rally_in_3_months\"><\/span><strong>+50% rally in 3 months<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>It&#8217;s important to remember that you are not ONLY looking for stocks breaking out to new all-time highs.<\/p>\n<p>The best monthly chart breakouts are typically preceded by solid bases of support that are already within striking distance of their record highs.<\/p>\n<p>When $CORT blasted off from its breakout, the stock cruised 50% higher in less than 3 months.<\/p>\n<p>Rather than buying the actual stock, we bought $CORT call options at $1.55 after the breakout.<\/p>\n<p>We sold the calls at $5 a few months later, locking in a gain of +220% on the option trade:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2016\/180520CORT.png\" alt=\"nasdaq daily \" title=\"\"><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Odds_In_Your_Favor\"><\/span>Odds In Your Favor<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Obviously, no trading system, chart pattern, or technical indicator works 100% of the time.<\/p>\n<p>Accordingly, not all stocks that rally to new highs zoom 50% to 100% or more in six months.<\/p>\n<p>Nevertheless, monthly stock charts do a fantastic job of helping you find stocks with the most explosive potential.<\/p>\n<p>Start producing above average gains over a short period by regularly scanning the monthly charts and buying stocks that fit the basic criteria above.<\/p>\n<p><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\"><strong>Sign up now<\/strong><\/a> for your <em>Wagner Daily<\/em> subscription and we&#8217;ll do your &#8220;heavy lifting&#8221; to find and alert you to the best breakout setups every day.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many new and experienced swing traders make the mistake of focusing only on short-term daily charts when scanning for new trading opportunities. While daily charts are great for locating low-risk entry points, the limited price history is not very useful when narrowing down a list of potential buy candidates. This is where long-term monthly stock [&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-5243","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5243","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=5243"}],"version-history":[{"count":1,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5243\/revisions"}],"predecessor-version":[{"id":11198,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5243\/revisions\/11198"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=5243"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=5243"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=5243"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}