Do you care about the stage of your bases…many of the stocks you focus on seem to be coming out of stage 1 or 2, but not all? Do you use all the O’Neil add-ons? Gaps, 3 Weeks Tight, First and Second Retrace to the 50-day? From your write-ups it sounds like you mostly build a position early and stick with it – until your sell rules kick in.

A:

Most stocks had their base count reset during the late ’18 bear market. Thus, you have probably only seen 1st and 2nd stage bases since you’ve been a subscriber to the service. Leaders, especially in the last few years, will sometimes form 4th and higher bases and do quite well.

What matters is what the big money is doing. If it is buying third, fourth, etc stage breakouts and showing sound accumulation, that is more important than what anyone thinks about base counts, including myself.

Only rarely do I buy gaps. Most of the time, a base will form right after the gap, which is what I key on instead of trying to get in on the gap day. I have never used 3 Weeks Tight and would only use a 50-day touch if there is not much distance between it and price. I don’t want to buy a touch if price has to travel 20%+ to get there because the stock must then go through a new base-building period at that point. That could take eight weeks, and by then the intermediate-term advance could be over.

If I either miss a breakout or want to add to a position taken on a breakout, I prefer entering on a pullback. This provides me with more opps than waiting for either a 3 Weeks Tight, 50-day moving average touch, or whole new five-week-plus base to form.