Prepare a Stalk Sheet of potential targets

I always post about stocks which have achieved some technical breakout. An active trader would always have a list of stocks with potential for breakout, which some call a 'Stalk Sheet'. I will give you an example of a stock that I am tracking now, IRIS.

IRIS (Main Board/Industrial-Technology)

• Timeframe - 5 - 20 days
• Trigger - RM0.18
• Target - recent high of RM0.22
• Comment -

IRIS is trapped in a descending triangle, with bullish breakout at RM0.18 & bearish breakout at RM0.14. RSI & DMI are pointing to a bullish breakout. MACD is poised to enter into positive territory. The latter should coincide with the next upleg after an upside breakout of the triangle.

Chart: IRIS's daily chart as at Jan 11, 2010 (Source: Quickcharts)

In the present market, one may be tempted to position ahead of a bullish breakout. If you have sufficient resources (read: funds) & short on targets, this may not be a bad idea. For example, you may accumulate IRIS at the 100-day SMA line support of RM0.16 & wait for a breakout.

Some players may buy ahead of a bullish breakout because they do not like to pay extra for a stock that has good potential. Normally, a stock that has a bullish breakout would have moved up a fair bit, otherwise there would not be a bullish breakout.

If a bullish breakout never comes, you would kick yourself for missing out on more immediate targets. In a present buoyant market, syndicates or pools may sometime do a hit-&-run job on targeted stocks. The modus operandi is to accumulate sufficient quantity of the stock quietly & then push the stock above a technical trigger point in order to entice the players to jump in. If there is sufficient following, the stock can move some distance before the operators start to sell off their shares and reap their profit. If there is no followings, the operators would just sell off their stocks & recoup their investment (even at a loss at times). That's why some technical breakouts can turn out to be bull-traps.