When a stock breaks from a well defined resistance - it sets the stock for a big move. Just imagine a horse breaking the fence after a long time and then running fast. That's how stocks react when they breakout from a resistance.
Lets take an example which I shared on StateoftheMarket Breakout Premium website: WABAG
This was the chart I shared on Feb 05 2014 just before stock broke out and this is what I shared on the notes
If WABAG stock breaks out this week by closing above 575 on increased volume – it will set the stock up for strong momentum move in following weeks.
The stock was at 562 then. Today stock is at 1186
As you can see in the chart - WABAG broke out in the week of Feb 14 2014 and just rallied vertically. That's what breakouts do, when they happen after a long time. It releases enormous bullish energy and stock makes exponential gains in fairly short period of time.
I cover Breakout stocks on a regular basis at smarketpremium.com. This stock was covered on Feb 05 2014.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers