If you’ve been a Stock Surge Daily reader for a while, you’ve probably heard me talk about Richard Wyckoff.
Wyckoff first laid out his buy-and-sell stock cycle in the 1920s.
It is as relevant today as it was then – if not more so.
I’ll tell you why that is in a moment, but here are the basics…
And these stages have been repeating themselves for more than 100 years:
- Stage 1: Consolidation
- Stage 2: Accumulation
- Stage 3: Distribution
- Stage 4: Capitulation
The pattern looks like this:
Wyckoff’s Four Stages of the Stock Cycle
If you want to make money in stocks, Stage 2 is when you need to own them.
Following a consolidation period, a stock will break out as institutions begin buying the stock in large size.
For this reason, higher prices will usually be accompanied by a surge in volume.
The rapid rise in the stock price attracts other investors who pile on and add to the momentum.
This domino effect propels the share price to new highs, allowing for big, quick profits.
In other words, Stage 2 is where you will see the bulk of your gains.
Finding Alpha Stocks
Right now, several key homebuilder stocks are on the move as they break out of their Stage 1 consolidations.
I added two of them to my Stealth Trades Watchlist on Monday – Century Communities, Inc. (CCS) and Toll Brothers, Inc. (TOL).
Both are up big this week, as expected.
CCS was a textbook setup.
And this is the exact formation I talked about in yesterday’s webinar for my latest and greatest advisory service, Alpha Stocks.
Alpha Stocks is all about using Wyckoff’s Four Stages to identify explosive breakout opportunities.
In the case of CCS, there was a clear profit trigger at the $75.40 level, as you can see in the chart below.
Sure enough, the stock blasted higher as soon as this price was hit.
It was the same story with TOL…
Shallower pullbacks from left to right… decreasing volume… and then a tight pivot to set up a low-risk buy point.
A Timeless Strategy for Generating Alpha
This strategy is timeless. It is based on supply and demand, which never changes.
Jesse Livermore used it more than 100 years ago to become one of the most successful traders who ever lived.
And it is still being used by investing champions today.
Now, to show you the power of this approach, I’ve just launched a brand new advisory service called Alpha Stocks.
At Alpha Stocks, I take the principles laid out by Richard Wyckoff, Jesse Livermore and many more of the world’s elite traders and condense them into easy-to-understand stock recommendations.
I look for stocks just entering their accumulation stages, like CCS and TOL above, which is where the big money is made.
I first introduced this strategy in yesterday’s premiere Alpha Stocks event…
You can’t afford to miss it.
Embrace the surge,
Editor, Stock Surge Daily