I love Stan Weinstein's stage analysis, elegantly simple, you could teach a child in no time what to look for and what to avoid.
2022/23 there were a few decent stage 2 moves on things like Yu (LON:YU.) and MS International (LON:MSI) Now we're probably 6 months into a new bull market in small/mid caps, theres many more potential candidates. This is much easier with a uptrending market, everyone's a stock picking genius at this point in the cycle and mistakes aren't punished nearly so severely, with breakouts tending to have more ooomph as institutions are done selling and/or buyers.
Always have to caveat no one knows the future, June in particular has historically been a hopeless month for AIM shares. FTSE250 not much better. So its no sure thing and theres always risks to be managed.
But as Mark Twain said-
“October—this is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”
Personally, what I look for is
- A decent stage 1 base built, longer the better.
- Moving averages at least flat, preferably starting to rise
- EPS upgrades ideally, tho many will move well before earnings come through
- Volume increase, tho not a deal breaker for me.
- Price above moving averages.
Gamma Communications (LON:GAMA) This is what I want
Shoe Zone (LON:SHOE) This is what I want to avoid. May be a great company but its not what im looking for. Moving averages pointing down, broken support. Time to buy this was Oct '21 when it started stage 2 + gap up.
Anyway heres a few recent possible stage 2, either broken out or close. I sometimes buy a starter or half position before the breakout if theres good news or a volume spike, then add later on a breakout or earnings upgrade.
LSL Property Services (LON:LSL)
Cavendish Financial (LON:CAV) (tho it is a different company now so the chart isnt really relevant)
