Tips For Finding The Next Big Gainer

Every year there are stocks scoring 100%, 200%, 300% or more in gains. In this post I want to bring you my tips for finding the next big gainer.

Let’s take a look at TSLA (symbol for Tesla). TSLA shot up 400% in a year. How would you have liked to get in on the ground floor of that one? It may be too late with TSLA, but there are many others ready to make huge gains in the coming year. How do you spot these big winners before they take off?

I like to study stocks, like TSLA, that have made big yearly gains. I want to learn from these winners. What did they have other stocks didn’t? Are there clues they will tell when a stock is about to explode? If so, I want to learn those signals.

Over the years, I’ve come to the conclusion that there definitely signals one can use to spot a stock that is about to explode. Once you know the signals, you simply use a stock screener to give you a list of candidates.

Let me show you how to do this with TSLA as the example.

In the chart below you can see that TSLA was having trouble going above $40 (left side of chart). This is called “resistence“. Typically you want to buy stocks that break past this resistence on BIG volume. If the volume is not big, it’s a fake signal.

TSLA broke past it’s resistence at the beginning of April (see #1) and it did so on big volume. A classic signal a big run up is coming. Now once a stock breaks past resistence, that resistence becomes support (or it should if the signal is a good one).

After a breakout, the stock may continue higher or it may try to test that support. TSLA did a test (see #2) a week later. If it falls through support, you get out with minimal loss. If it bounces off support, and you haven’t gotten in yet, this offers a second chance to buy before the big run.

Suppose you missed the two chances in April. TSLA offered a thrid chance (see #3) at $60 a share when it repeated all the rules laid out above.

Now that you have discovered how a winner acts, you need to look for this in all stocks. Get yourself a stock screener and set it to find all stocks that are breaking out to new highs (see #1 above). Here is a list of stocks that made new highs today. Use this list as your starting point.

This list could contain 300 to 700 stocks or even 0 if we are in a bear market at the time you are reading this. From this list we need to eliminate many more to get the list to a comfortable amount. If you have a stock screener that can do this, great. Here are some rules each stock must have or it’s out.

One warning: Stocks that have already made many new highs within the past 52 weeks, means you are too late to the party. Pass on these. You’ll need to look at a stock chart to see how many new highs it’s made. Ideally you want to buy on the SECOND new high in the last 52 weeks.

By now your list should be down to a more manageable size. All the stocks left on your list have already passed resistence levels. Many may be 10% or higher. You don’t want to buy in here. You want to wait for the pullback.

It would take too much time to watch all the stocks each day for a pullback. What you want to do is set an alert. You want to receive a text or email when that stock pulls back to it’s support level. For example, if TSLA last made a new high at $40, the support level is $40. I would set a buy to pick up TSLA at about 1% higher than that, or $40.40. Should TSLA drop back to that price, I want to be notified so I can go and buy it quickly.

If the stocks that are still alive on your “new high” list are within 2% of their last new high, you can buy now. You don’t need to wait for a pullback. The pullback only applies to those stocks have advanced much higher than their support level.

I hope these tips help you find the next big winner. Would love to hear your success stories in the comments below.