Stocks breaking to new highs often exhibit continued upward movement. The best candidates for this strategy are stocks breaking out of consolidation patterns and breaking highs that have been established between eighty and one hundred trading days ago.

Prices on the day of the breakout should be accompanied by above average volume, close at or near the high of the day. If the stock closes near it's low, it is a good indication of a false breakout.

Consider the following chart:

This stock was in a short consolidation period when identified by Stock Filter. It broke out of the consolidation pattern on strong volume, and closed near it's high of the day.

The settings for this query (and explanation of logic) are:

Volume Tab:

Number of shares traded > 200000 Used to eliminate thinly traded stocks. You can change this setting to match the exchange. Toronto exchange (TSE) may be lowered to 50000 Average Volume 20 Days Today's Volume Above Average 1.5 Times This setting will only identify stocks where the volume is greater than 1.5 times their average of the last 20 days. This will confirm that the breakout is accompanied by above average volume. You can increase the value if you are searching for stronger breakouts.

Liquidity Tab:

Trading Activity 90%  Lookback Period 40 Days It's a good idea to use this setting in your queries, as it eliminates stocks that are not frequently traded. Use this setting if searching OTCBB and CDNX exchanges, as many of the stocks do not trade regularly.

Price Tab:

Close Price Greater  2.00 Can be changed to suit your portfolio level and trading style. During the learning and testing phase, it is a good idea not to be too restrictive so you can determine how the patterns develop.

High/Low Tab:

Lookback period for Highs 80 Days The time frame can be varied to suit the user, however breakouts tend to be more powerful if it is a breakout of a long-established high. By selecting new Lows, instead of highs, you can search for shorting candidates.

Candle Tab:

Closing Price >75 % of Daily Range Breakouts, in general, should be accompanied by both volume and high closes. A strong closing suggests momentum, which may carry into the next trading sessions, while a weak close may indicate a false breakout.

Visual Assessment

It is necessary to visually inspect query results for a brief consolidation prior to the breakout. Below is the chart showing its activity after the breakout: