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Industry groups and Exceptions

QuestionsCategory: QuestionsIndustry groups and Exceptions
Ahmed Morsi asked 2 years ago

Hi Pat!
I hope all is well with you!
Question/ discussion for you. Any feed back will help.
I am forming a watchlist of potential new market leaders in preparation for a future follow through day or bull market. Much of these stocks currently are in a poor industry group. Which leads to my question.
When can we make the exception to the rules and buy a stock that is in a poor industry group? For example. If the stock meets all the criteria of 90+ composite rating, “A or B” accumulation rating, 90+ RS rating great sales and or great eps above 40% with a clean and simple base pattern, its above all the moving averages BUT is in a terribly ranked group of 100+; How do I know when to make the exception and buy it’s breakout? I’m aware that over 30% of a stocks move is related to the industry group and we should be focusing on the top 40 or 50 groups, which leads me to hesitate when its time to pull the trigger.
Stocks I’m looking at that are showing positive technicals (based on everything you taught me) are
“ON,” “WIRE,” “SWAV,” “ARIS
they all had some sort of a breakout a 6th grader could see a couple weeks ago but I didn’t pull the trigger because they gapped up, were in a poor group, and below some key moving avgs. ARIS was the only one I moved on because it was at least in the top 100 at the time and was moving into new highs.
Since then all these stocks appear to be acting well by pulling back on decreased volume. So next time they breakout and if they are still in a poor group how do I justify the buy?
(Getting to know you better I believe you will tell me to go smaller- which I definitely have been.) I have to admit that I am not a consistently profitable trader. In fact I’m no where close. but my loses are much smaller now and I’m focusing on mastering the skills. Nothing too fancy but this market has not been helping. I’ve noticed one has to be really quick in a market like this and I’m not sure if its worth it in this environment. I feel like I have to be a day trader to have the confidence to buy these breakouts these days. I only do it on my days off so I can watch it.
I am really sorry this is longer. I don’t mean to take up too much of your time! Thank you, I have learned so much from you. (I’m constantly watching your library of videos on the site)
Thank you Patrick. ~Ahmed

1 Answers
Avatar photoOwen Staff answered 2 years ago

Hi Ahmed,
Pat made this video for you...
https://youtu.be/ghj-JpS-nqQ