For Immediate Release
Chicago, IL – February 15, 2022 – Stocks in this week’s article are BCB Bancorp, Inc.
BCBP
, Verra Mobility Corp.
VRRM
, Northeast Community Bancorp, Inc.
NECB
and Alithya Group Inc.
ALYA
.
4 Affordable Breakout Stocks for Stunning Returns
Choosing breakout stocks is probably one of the most popular techniques used by active investors. The logic behind this strategy for stock selection is to identify stocks that are trading within a narrow band. Such stocks are to be purchased as soon as they move above this channel and sold when they fall below. In case a stock moves above this band, it usually gains momentum.
However, market watchers often caution against timing such a move incorrectly. This is because there is a significant risk of identifying stock movements as breakouts, even when this is not the case. At the same time, when utilized correctly, this strategy yields substantive gains, which is the reason for its enduring popularity.
To that end, BCB Bancorp, Inc., Verra Mobility Corp., Northeast Community Bancorp, Inc. and Alithya Group Inc. have been selected as the breakout stocks for today.
Determining Breakout Levels
The first step to selecting the right breakout stock is to calculate its support and resistance level. A support level is the lower bound for stock movements while a resistance level refers to the maximum price which it trades within over a considerable period.
In other words, the demand for a stock is at its lowest at its support level, which means most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, which means that they would like to add them to their portfolios. The key to identifying breakout stocks is to zero in on those that are on the verge of a breakout or have just broken above the resistance level.
Has a Genuine Breakout Occurred?
The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is at all genuine is another matter altogether.
For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the trading channel that has been established is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price which may not seem attractive at first glance.
For the rest of this Screen of the Week article please visit Zacks.com at:
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