Understanding engineered breakouts

Video trade recap plus my analysis of what I call an ‘engineered breakout’, when concentrated buying, whether by a single large trader or a trader with a following (such as Superman or the Lionmaster or others) causes a technical breakout after which momentum buyers further push up the stock. Best quote of the video: “This is the best damn trade recap video you will see … today.”

Due to overwhelming demand (most particularly from Tim Bohen aka tbohen), I will be borrowing an iPhone with the “I am T-Pain” app on it while in Vegas so I can auto-tune a trade recap or two. (See Autotune the News if you do not understand.) I have a volunteer who will lend his iPhone to the effort so no need to worry.

Daily profit: ($11.64)

Disclosure: No positions. I have a disclosure policy.

18 thoughts on “Understanding engineered breakouts”

  1. I wouldn’t use the word artificial…”engineered” is the perfect description for the action….

    my favorite video of yours ever….

  2. Great recap, best ever. agreed.

    I go to bed at night and dream of understanding these moves, I know that sounds crazy and maybe even stupid but when your obsessed your obsessed what can I say. Just one idiot in a smart mans world I guess.

  3. Now that I think about ZAGG, certain somebody is getting this unfair advantage of followers buying in and pushing it higher which then lets certain somebody brag about how well it broke out….!!!

    1. Jamal & stkonlinetrader – The point of this isn’t that it is the followers that push it up and keep it up, it is that the momentum traders buy it after the breakout and keep it up. If this were just a bunch of dumb followers with market orders, it would’ve spiked quickly and then drifted back down.

      If the stock hadn’t been on the verge of breaking out then it would not have closed at $5.90, just below the high. So with an engineered breakout the stock moves up quicker than it otherwise would have moved, but I do believe this would have broken out tomorrow anyway even without the concentrated buying today.

  4. Well, not every stock that is about to break out does. Sometimes resistance holds, thats why its called resistance.

    But your point is still valid. If it wasn’t this newsletter guy fabricating the breakout, it would be another, or just a group of heavy hitter traders, or even an insider….on an OTC piece of shit like this, it is not going to break out because Fidelity Magellan is buying shares.

  5. 1 minute late and the price went from5.55 to 5.80 This person is in a way showing us that if a price point is broken, the stock will trade in favor of that strong breakout… which backs up the whole psychology of trading and momentum buyers.
    That same person is ideal for spotting trades the other way. And he doesn’t abuse the fact he could go long every trade.

    I love the video Reaper, very educational. This site is great. I have six pages/tabs that load when i open my browser – Zecco, TOS, Gmail, GoogFinance,TheLion, and ReaperTrades…

  6. u should mention stockpreacher gets paid by companies/shareholders who then sell into their own pump, the certain someone only gets compensated by subscribers and does not trade against them and that certain someone only gets followed due to past success, unlike stockpreacher who buys and lures in subscribers with misinformation making one stock’s breakout realer than the other

    1. Hmm, looks like you just made that point for me. Obviously popular traders with large followings aren’t like Stockpreacher or pumpers at all. The only reason I mention both is because both are cases where there is an identifiable reason for a stock to jump. And unlike some other popular traders like Superman, your trades are verifiable so people can be sure you don’t trade against your subscribers.

      Same thing goes for hedge funds on a larger scale — they can’t be responsible if people bid up stocks that they have a stake in. But it would be unethical for a highly-regarded hedge fund to sell into the pop that its own investment generates.

  7. I agree with Reaper, nothing wrong in what is going on, and it certainly isn’t Tim’s “fault” that he has been successful enough to gather a large # of subscribers.

    And anyone who thinks Tim’s primary source of profits is his actual trades (i.e trading against his subs) hasn’t been paying attention. It’s all about the merchandising baby!!!!!!

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