Pre-breakout research
Pre-breakout candidates are stocks approaching resistance while the underlying structure remains constructive. Higher lows, repeated resistance interaction and tightening price action can make these stocks worth investigating before a breakout attempt occurs.
The purpose is not to predict that resistance will break. It is to identify a stock at an earlier stage of the process so the investor can research the company and monitor how the structure develops.
Breakout research
Once price moves through resistance, the research question changes. The important issue is no longer simply whether resistance exists, but whether the move remains technically meaningful and whether the stock has already become too extended from the original base.
Breakout research should still consider the quality of the prior structure, volume behaviour, broader market conditions and the company information behind the move.
Launch Pad research
The Launch Pad Scanner is designed for stocks that are still building organised bases within established trading ranges. These structures can include repeated resistance tests, stable or improving support and enough time for the base to become technically meaningful.
This creates a different type of research list: not stocks already moving aggressively, but companies whose technical foundation may deserve continued monitoring.
Avoid chasing the move
One of the biggest problems with breakout stock picks is that a stock may look attractive only after a large move has already happened.
Once price becomes too extended above the original resistance area, the technical base that created the research idea becomes less relevant. A disciplined process therefore needs to distinguish between a developing breakout structure and a stock that has already moved too far from it.
