Have you ever gone through mental battles with yourself… spinning out of control, deciding whether you should take on a trade or not?
I know I have…
… heck, it happened to me last week.
I was stalking ZAGG Inc. (ZAGG) for quite some time… and I debated back and forth whether I should buy shares or be patient.
So what did I do?
I turned to my trusty rocket pattern and paired it with a potential catalyst… and after that, it was smooth sailing — I had a solid thesis so I had high convictions that the stock could explode higher.
Man, was I glad I bought shares because I’d be ticked if I missed the action… and $22K in profits.
So why was I so compelled to take the trade?
I’ve been trading in and out of ZAGG — and already locked in a $12,000 on a swing trade in it.
At the time, the stock hit a trendline (the upper blue line in the chart below)… and pulled back.
Of course, when I’m sitting in profits and see that price action… I’m going to take my winnings and move onto the next trade.
However, something wasn’t sitting right with me near the end of the day… because I kept thinking about ZAGG and I pulled up the symbol again. It had some bullish news and there were buyout rumors surrounding the stock…
… so I jumped back into the trade.
This time, there were some key levels to watch.
If you look at the daily chart above, the blue horizontal line was a key breakout level… if it got above that, it had room to run.
That’s what I call the “rocket”.
With this trade and potential catalyst, I figured the stock could build some momentum and shoot off through the roof.
So I actually added shares on Friday, expecting to hold it into this week.
Now, I didn’t get the catalyst I wanted… but that’s okay.
On Tuesday, there was heavy volume hitting ZAGG as it broke out over a key resistance level (the blue horizontal line from the chart). It was a good sign because the stock acted exactly like I thought it would.
Sure, there was a massive move in ZAGG… but it wasn’t quite near my profit target.
My average price was $6.30… and I was just seeing a spike up above $6.60 (the key breakout level). So I was patient with it and just stuck the course.
You see, when a stock breaks above a resistance level, that’s a signal that there is more demand than supply.
If you think back to basic economics… when there’s more demand than supply, prices go up.
Later that day, ZAGG closed at $7.12 — above that supply line (the resistance level).
That was a clear signal that the stock could build momentum and continue higher…
… and I was glad I stuck with it… because the very next day ZAGG rocketed higher and I was able to take profits and lock in a $22,000 winner.
Right now, especially with the market rocking higher, and IWM (the small-cap ETF) running higher… it makes sense to look for rocket plays because you could take part in these momentum plays and consistently rake in 10-20%.