$GNRC

This is an institutional quality stock that has been appearing on IBD 50 screen for the past year.  It used to be a stock ranging in price between $50 and $60 just 2 years ago and trading less than 500,000 shares per day (less than $60 million ... share price x volume of shares traded per day).  Most institutions prefer to trade stocks that trade $100 million or more per day.  They prefer very liquid stocks because not only do they have deep pockets to acquire several billions of $$$ in their stocks of choice but also because very liquid stocks offer them the opportunity to trade very liquid options on the stock.

During the week of February 10th 2020, the stock shot up in price by +10% within 4 days of heavy trading volume.  Over $2.5 billion of trading occurred within 4 days with trading volume that had shot up by 15 times the daily average trading volume on February 12th.  This ought to get any traders attention when one notices such a huge spike in the sheer volume of shares exchanging hands.  Within 3 months (end of June) the stock had moved up from $117 to $193 (+65% move).  This stock immediately got on my radar and kept it on my watch list.  Patience is the key.  It takes a lot of time for the stock to digest these massive  gains.  Institutions normally take a breather after making such a huge run in price.

Here is a short synopsis of How I handled this stock to profit handsomely utilizing the basic IBD (Investors Business Daily) rules that Mr. William J O'Neil practices.

1. Oct 28 2020 ... Stock breaks out from its consolidation of 208.26 as a pivot identified on my chart.
2. Oct 30th 2020 ... Established an initial position @ $213.99 (It's + 110% as of Friday July 23rd)
3. Nov 12th 2020 ... Added additional position @ $224.30 (It's +100% as of Friday July 23rd)
4. Feb 11th 2021 ... Stock breaks out from $287.55 as a pivot identified on my chart.  It rises +20% within days - triggering the "8 Week Hold Rule".  This is a confirmation and a sign that the institutions are deeply committed to acquiring this stock.  
5. Identified $330.31 as a support/resistance area on my trading platform to alert me.
6. Stock consolidated for 3 months - Mar/Apr/May - to digest the gains of +300%  since its initial run from Feb 2020.  Several small positions were added between $300 and $325 to concentrate the portfolio to just a few leading stocks.
7. June 8th 2021 ... Stock breaks out from  $331.31 in volume of 3 times the average trading volume of the stock.  One can see the 8 day ema(exponential moving average) separating away from the 21 day ema and the stock making its run higher.  It never looked back.  The stock never corrected much while the market went into correction a week before.
8. Currently the stock is hovering around $440 identified as a 3 weeks flat base on my platform.  Earnings is due this week.  The last few additions to stock positions (additions made from $300 to $325)  were closed down for +40% profits.  
9. Stock is currently extended from its 50 day sma (simple moving average).  There is a lot of  "White Space"  between the 8 day ema and the 50 day ema.  Similar situation occurred on Feb 22nd when the stock made a gain of over +20% and triggered the "8 week Hold Rule".  History of the stock indicates that the stock tends to consolidate its gains after such a massive move.

Stock will be evaluated after the earnings are reported later this week.  It would be best for the stock to consolidate and form a new base from which to propel higher.  I am looking for the 50 day sma to catch up to the 21 day ema and fill up that space closer to the 21 day ema.

I hope this post helps you in identifying the leading stocks utilizing the IBD screens effectively.  Building a good stock watch list and annotating your stock charts would help you to track stocks that are of institutional quality.  Mitigating risk by harvesting profits prior to earnings is a good strategy to follow as well.  Patience is the key when you are monitoring stocks that are on your watch list.  Success of profiting in a leading stock is all about waiting for the right set up to increase the odds of a successful and a profitable trade.

Happy Trading this week.

Market tone has been updated by IBD to  "Market in Confirmed Uptrend".  It's a sign to start rebuilding your portfolio with new leading stocks or adding to the existing stocks in your portfolio with additional buys.  

Amin (investorspotlight@gmail.com)