The markets are moving lower today… at the time of writing this, down 500 points on the Dow.

But guess what?

That didn’t affect my trade at all.

You see, penny stocks don’t really care what the markets are doing.

They move to the beat of their own drum.

Just take a look at OZSC…

 

 

And compare that to the Dow this morning…

 

 

Do you see what I am talking about?

With the Dow down 500 points, OZSC is popping up like it’s nobody’s business.

So how can you find stocks like this?

Pay attention because I’m going to walk you through the consolidation breakout trade I took in OZSC yesterday, that paid off this morning… even though the markets were tanking.

 

Consolidation Breakout

 

This is truly one of my favorite trade setups.

It’s both easy to spot and understand.

Just think about a simmering pot of water on the stove.

It’s quietly building up heat…

And once it does, the water will boil over.

A consolidation is kind of like that.

The stock is taking a break while it builds up energy for the next move.

Keep in mind that the next move can be in any direction. This is why I only buy after it breaks out of the range on higher volume.

Take a look at OZSC for an example:

You see how tight the trading range is in May and June?

This is the consolidation period… or the simmer time.

 

 

How do I play this period?

I don’t… I simply wait.

Just because it’s consolidating doesn’t mean it will break out, or that it will do it any time soon.

Not to mention it could end up breaking out in the opposite direction… just be patient.

I don’t even have to waste my time looking at it.

In fact it wasn’t even on my radar until yesterday…

What put it on my radar?

It broke above the consolidation range (blue line)… and volume was spiking up at the same time.

Volume is key in breakouts because it proves trader conviction in the move and helps push the momentum.

It also creates the liquidity I need to get in and out of the stock for a profit… which is the name of the game.

So what did I do when I saw it break out?

I jumped in and sent an alert out to my members of course.

 

 

That was yesterday in the last hour of the trading day…

There’s a reason I like to put trades on at that time of day.

It lets me see which stocks people want to be in overnight.

How?

Think about it. If a stock is trading close to highs going into the close, that means people want to be in it…

They aren’t waiting for tomorrow, they are jumping in now… even though the market is about to close.

This proves the strength of the stock through demand and creates overnight momentum.

My goal is to use that momentum the next morning to grab profits and grow my account.

And that’s what I did with OZSC selling on a gap up this morning… while the markets were tanking.

 

 

And as always my favorite thing to see is when my members are learning the trades too.*

 

 

Here’s a look at the move on an hourly chart so you can see more clearly how the trade set up in the last hour of the day.

 

 

Hopefully this helped you see the simplicity of a consolidation breakout…

For that reason it’s one of my bread and butter patterns that I use quite often.

Things to keep in mind are the strength of the move out of the consolidation, volume levels, and closing strength…

To learn more about how I have been multiplying small accounts over and over…

Check out the 5 Steps I Use To Grow A Small Account

 

 

 

*Raging Bull does NOT track or verify subscribers’ individual trading results and these individual experiences should NOT be understood as typical as or representative. Please see our Testimonials Disclaimer here: https://ragingbull.com/disclaimer.

Author: Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

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