Tackle Today: Why We Like Breakouts
August 31, 2021
When Buyers Unite ≈
Traders,
A breakout occurs when prices breach support or resistance. With the market in such a powerful uptrend, bullish breakouts, or those that take out resistance, are the most prevalent. Their appeal comes down to two factors: the favorable reward to risk ratio and the higher probability.
Let’s focus on the second variable.
Market participants are divided into four groups.
-Those who buy to go long (new bulls)
-Those who buy to cover shorts (old bears)
-Those who sell to go short (new bears)
-Those who sell to exit longs (old bulls)
The best bull trades occur when both groups of buyers are present and both groups of sellers are absent. The bullish breakout pattern provides just such a situation. When prices breach resistance, new bulls jump on while old bears depart to minimize losses. At the same time, the strength warns off new bears wanting to go short. And why would existing bulls wish to exit their position if the stock just blasted through a resistance zone?
They wouldn’t.
When you think through the disposition of each group, you discover why breakout patterns are so compelling.
#TeamTackle
Chart of the Day
Apple Breaks Out
Want to know why the S&P 500 and Nasdaq both jammed to fresh records on Monday? Because Apple, the largest holding in both Indexes, rallied over 3%. Let’s see if buyers can give some quality follow-through.
Video of the Day
Onboarding with Coach Frank
Coach Frank always does a fantastic job highlighting the new and existing features for new members to the Tackle Trading community. Last night was no different. Check out last night’s onboarding session with Coach Frank if you want to see what Tackle Trading has to offer you.
Today’s line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Coaches Show 8:30 PM EST
Join us every Tuesday at 8:30 PM EST for the Coaches Show! Tonight Coach Gino and Greg will be hosting the event.
Financial freedom is a journey
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
