When I see a stock break out of an intraday congestion or consolidation as a momentum player, I m looking for immediate continuation. That s the normal expectation. Often stocks don t go up, they are put up. So typically, I will place a stop immediately below a consolidation. However, if a stock comes in below the breakout point, I m usually gone.
Most traders wait for a base to be violated.
If the stock reasserts itself, then I ll re-enter. That s the way I like to trade. Especially with today s volatility. Depending on the stock, I find it difficult to manage five to six positions at one time, and if we are talking about Internet stocks, managing more than two or three on an intraday basis can be a real feat. So if I enter a stock based on momentum, I expect continuation.