What factors would you scan for a stock that is consolidating & awaiting a breakout?

[Mr. Charts]

Also I use it for entries AND exits AND managing the open position.

 

[babymush]

babymush,
Yes, imo, level2 is a great help in determining whether a price will hold, rise or fall at any level, but my own use of it in conjunction with several other factors keeps me out of many breakouts which then fail. Equally that micro analysis points to successful break outs. Nothing is totally infallible, but this means I take fewer trades but with a higher success rate.
Level2 is like a microscope, an indispensable tool but not some magic wand. It is not easy to learn as there are many subtleties to its use - and it has several uses.
It is also a skill which grows with use and experience. I very often find I enter trades before the move appears on a chart or volume bar - and I frequently exit a trade at or before it turns against me. My own use of level2 is integrated with other factors and is essential to my trading.
Level2 is about faking MMs, buying and selling pressures, behaviour of market participants at different levels and how and when that behaviour changes.
Between the above comments and ardhill's helpful post, you might get a glimpse of what it's all about.
The person on these boards who I think is a great level 2 trader is Naz and you should also read what he writes.
Richard

However, reading through this board, there are very few articles on actual level 2 trading methods - As in what to look out for etc etc .. Is that true?

 

[babymush]

How would you actually use it to entry, exit etc? Any good articles I can start from?

 

[CipherinFool]

I also saw a suggestion posted somewhere to screen for an ADX < 10 (I think db's idea). I tried this (plus some other qualifiers like price > $1, etc.) and came up with a few stocks that seemed to be basing, although I'm green at this so not sure. I was able to run this for free at stockfetcher.com, although the freebie screen doesn't match nearer than 5 days back.

When I ran it last week I got a number of stocks that included GENZ, JDSU and ISIL. Today there are others showing up. This does seem effective in finding stocks that have "quieted down", but I assume further examination is required to see if the p/v characteristics you want are there. I would be very interested in studying some of these examples to understand what the p/v action is saying, so I will probably start another thread for that.

Regards,
CF

 

[babymush]

However, I do think there is a problem with stocks that are consolidating - there tends to be a lot of false breakout as the range of the stock is not set and it frequently breaks out by a tick or 2 before falling back down

This is as compared to a stock that had a big rise recently and is having a retracement - I find that breakouts in that instance is more reliable.

 

[jtimpson]

How would I scan for "Slim Jim" Sideways Consolidations using daily charts? Thanks.

 

[Tomatsu]

Re: What factors would you scan for a stock that is consolidating & awaiting a breako

well i think the best way to check a break out is look at volumes....if they have started to increase over a short-time period there is a break out in the making.....further if resistance levels are breached and stock is slightly up its year low coupled with a greater volume, that signals a strong buy...

i have been studying trends and came across three stocks which show such a break out and i am bullish on them
one is CMC commercial metals co, its starting to show a break with good volumes
the other is CRGE clenergen corporation, a bio fuel company, its showing a breakout from its second resistance level and showing greater volumes, its definitely going up
the third is BLL ball corporation, it is trading between its 52 week high and low above the last resistance and increased volume, another buy in my view