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Here are some recent quotes from 11/17/16 articles that point out nuances of buy points.


e Stock Spotlight list received some new blood and a lot of action Thursday, with a number of stocks climbing out of consolidations and moving to new highs. Some of those moves were breakouts, others were not.

That was the case with Inphi (INPH), Arista Networks (ANET) and KLA-Tencor (KLAC). All three advanced above brief consolidations and moved to new highs, and to different degrees, all three cleared buy points.

...

Arista cleared a flat-base buy point of 87.72 in strong trade Monday. It has since traded tightly, adding small gains Wednesday and Thursday. The 10% consolidation was well within the 15% maximum for a flat base. That means the base is complete at five weeks. Consolidations of more than 15% require at least seven weeks to complete.


My note: the trade Monday looks about 40% above previous day which also happens to be 40% above the moving average. IBD says you really prefer to buy a breakout that has has volume of at least +40%. (The tough part is buying it early enough to get a good price and then hoping the volume comes through. In some cases it is obvious quite early in the morning that volume will be great, in others it is not.

(I did get long ANET)


KLA-Tencor offered two possible buy points. The initial buy marker was at 75.60 in a cup-with-handle pattern. The maker of high-end chip-production and test equipment tinkered above and below that level for a week before putting it away with a 3% gain Tuesday. The advance came in weak trade, far below the 40% above its 50-day average necessary to qualify as a breakout. But if volume rises in subsequent sessions, that can confirm the breakout.

The other buy point is 77.95, charted off the left side high of a cup base. KLA brushed above the buy mark Thursday with a 2% gain. Again, the move came in too weak to qualify as a breakout. But this time it moved KLA to a record high, surpassing its previous peak set in April 2000.

The stock's Relative Strength Rating remains soft at 73, a possible warning flag, along with a very high level of long-term debt. The stock's Accumulation/Distribution Rating is a very strong A-, however, and its Up/Down Volume Ratio is a very healthy 1.5. Both indicate strong levels of institutional demand.


I passed on KLAC, ok I actually did not have it on my watch list ;-)
and
Inphi's move was a different story. Like Arista and KLA, the Santa Clara, Calif.-based chipmaker cleared the left side high of a five-week consolidation and moved to new highs. But the pattern was nearly 20% deep -- too deep to be a flat base. That means it would need to be at least six weeks long, rather than the five-week minimum reserved for flat bases.

Inphi could have been bought as it retook its prior buy point, 44.64, from a flat base formed in August and September. But the old buy point carries more risk, and would require a high level of conviction to commit to.</>


I did happen to buy it as it surpassed its old buy point, and it is working ok so far.
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