Last week's price action of Bank of America (BAC) has been one of these examples. The chart below summarizes the factors I'm looking for: it is not only the breakout itself, but also relative price action of the stock and underlying sector. I want to see relative momentum prior to the move and very clean price patterns. Still, I'm playing it low risk: I take half the final position on the breakout and add on a potential consolidation. Since most breakouts fail, caution is warranted and smart money management is key.
Disclosure: Covestor Model is long BAC
