The IBD 50 this week is filled with stocks that have recently made respectable gains after breaking out of 3 Weeks Tight patterns. It also shows two stocks that have just set up this pattern. ALXN has established a 3 Weeks Tight buy point of 87.73 and VAL at 47.71.
IBD keeps referring to 3 Weeks Tight patterns as places to add on to established positions, but my question is, if I missed this whole move in ALXN can I get in on a breakout from this formation? If the answer is no, what about on a bounce off the 50 day moving average? Do I have to wait for it to form a new base?
I probably wouldn’t be ready to buy even if the answer is yes because I already have two open positions and the Distribution Day count is beginnging to concern me. Also, my judgement is a little skewed when it comes to ALXN because that was my big winner last year and as far as my emotions are concerned it can do no wrong. One thing I’ve learned this year is that I need to avoid stocks that I have these feelings about. On the other hand, I didn’t buy AAPL on its last breakout because I don’t trust my emotions (and it was a very late stage base) and it shot straight up.
SSW also stuck out to me in the IBD 50 this week. I believe it was the only stock in the list that had formed a cup with handle with a buy point listed. It has been working on this consolidation for about a year, do it looks much better in a weekly chart than a daily. Its Industry Group is currently ranks 129 and there are lots of red and yellow lights on the Stock Checkup, but it could be something interesting to watch over the next few months. I put it on my watchlist for the week, but there’s a good chance something better comes along in the next week.