Breakouts and Breakdowns

There are two breakout patterns that we look for.  The Sequential Sell breakout pattern is a modification of DeMark’s Sequential pattern.  It takes advantage of the fact that equities that fail to turn around upon a completed Sequential countdown tend to keep moving in the same direction.  We use the pattern to scan the entire market for potential breakouts and breakdowns and then watch for pullbacks to the breakout region using standard Wyckoff price and volume methods.

Finding high-growth breakouts is done by using proprietary scanning techniques that search for fundamental and technical properties.  Once a list of high-growth equities are identified, patterns are monitored for breakouts.  We enter positions when the high-growth equity pullback to breakout regions on lighter volume.

The Sequential Breakdown setup is simply the inverse of the Sequential Breakout. It takes advantage of the tendency for prices to continue lower once a Demark Sequential Buy pattern is violated. It is applied by waiting for the breakdown to occur and then waiting for a retest of the breakdown area. This method is similar to “jumping the creek” and “coming back to ice” as described by Richard Wyckoff.