[marry123]

I think I found one that may meet your requirements. It has broken out of a base that has been about 3 years in the making. It broke out on huge weekly volume in Jan. running from around 0.15 to 0.30 roughly while the 30 MA was moving to the upside. The price broke above the SPX price line some months back.

It has resistance at 0.30 and 0.35 so the question is when would one buy this now if one did not know about this stock and did not buy on the breakout at 0.15 cents? It has come back to test the 30 MA at around 15 cents so everything looks really good as it seems to just be starting its phase two run but my uncertainty is whether one needs to wait to see it break above 0.35 cents or whether even at current levels it is considered a proper entry long.

The shape and position of the chart is much more what we look for in the method, and I've marked up the weekly chart to highlight the Stage 2A breakout point, and you can see some volatility contraction occurring on the daily chart. Although the percentage moves are very high due to the size of the stock.

The initial Stage 2 continuation breakout point from its first base would be a daily close above 23 imo, as it put in a lower high at that level in early March. So that would be one potential entry point, but as you said it's already pulled back, so the method does allow for pullback entries when it's in early Stage 2. So it is in a buyable position. But I personally always prefer to buy a breakout, as it confirms the path of least resistance is still higher, and shows momentum is in its favour.

The main issue I would have with this stock is the illiquid nature of it, based on it normal daily price action. Which makes using a machine stop loss virtually impossible, and means that the bid ask spread is generally very high. i.e. on checking this morning its spread was 4%. That means that you'd open the trade down -4%, plus whatever your entry and exit fees are based on your position size. So you could find yourself having to recover more than 5% just to breakeven on the trade. Which to me would be unacceptable personally, as I think costs and spread should be below 1%. This is not a requirement of the method however, but backtesting from others has shown the dramatic effect that high spreads and fees have on overall performance of a portfolio. So its best to focus on highly liquid stocks if you can, as well as minimising trading fees.

Thanks, Isa. Yes, the problem with this is it is a penny stock so has the big spreads which is a negative. I am trying to find Canadian stocks that meet the proper buy criteria on the TSX (being mindful the exchange is still in stage 4) as they are not penny stocks like those on the Canadian Venture exchange such as OVT.V so have high liquidity. But it is helpful to see that this stock is what you look for in terms of the stage analysis method (if it were not for the high spreads).