Home » How We Played the Breakout in ProPhase Labs

How We Played the Breakout in ProPhase Labs

We’ve been knocking it out of the park over at my Alpha Stocks research service lately. 

Even with the bears running wild this year, we’ve been finding winning trades on both the long and short side.

I’ve told you about our short trade in Pegasystems Inc. (PEGA) we closed back in May for a combined return of 21.6%.

I also told you about our long trade in Permian Basin Royalty Trust (PBT), which generated a combined gain of 21.3%.

Well, this week, we were able to take profits in another one of our long ideas, and I want to tell you about it today…

Get In, Get Out, Get Paid

On June 27, I recommended a new long position for Alpha Stocks subscribers in ProPhase Labs, Inc. (PRPH).

Here’s an excerpt of the alert I sent to subscribers at the time…

“PRPH is a pharmaceutical company showing tremendous strength.

The relative strength (RS) line is surging to new highs, and the stock has advanced more than 85% in the last six weeks. 

The up/down volume ratio is also through the roof at 1.89, which is a good sign that large buyers are supporting the stock.

The fundamentals are fantastic… Four quarters in a row of triple-digit sales growth and a 10-fold increase in earnings in the most recent quarter.

After a big move higher in May, the stock pulled back slightly to digest the move and absorb profit-taking. 

But it is again making new highs, pointing to another leg higher.”

And here’s how the chart setup was setting up before the breakout…

June 24 Daily Chart of ProPhase Labs, Inc. (PRPH) – Source: TradingView

As you can see in the daily chart above, the stock was on a tear throughout May and early June before pulling back about 10% to its 21-day exponential moving average (blue line).

The stock consolidated for a few days after that and then proceeded to move higher again.

At this point, I saw that the consolidation range had created a horizontal upper resistance level that we could use as a potential breakout point.

Catching the Breakout

On the day of the alert, I saw early in the morning that the stock had gapped higher above that resistance level by about 2%.

So, I decided to send out the buy alert, and we were able to take a position at $11.97 per share.

Well, the gap higher turned into a full-on breakout, and the stock finished the day higher by more than 10%.

Here’s the current daily chart showing how the breakout transpired…

Current Daily Chart of ProPhase Labs, Inc. (PRPH) – Source: TradingView

The next day, the stock gapped up by another 2% early in the session.

So, I recommended that subscribers close one-third of the position at current levels and raise their stop losses to breakeven.

We recorded an exit price of $14.05 on the first one-third, which equates to a one-day gain of 17.4%!

Stops Save

Now, regular readers know about what I call the “squat…” 

After a stock breaks out, it will often pull back, or squat, down to retest the original breakout point.

That’s exactly what happened with PRPH the next day. The stock pulled back to erase all of the bullish move we had seen in the prior two days.

This triggered the stop loss on the remaining two-thirds of the position, which thankfully we had adjusted higher to breakeven at $11.97.

In the end, though, this turned out to be a great trade that took place over the course of just two days.

We recorded an average gain of 5.8% on this trade during a time span in which the S&P 500 fell 2.6%. 

Your Free Strategy Session

This is exactly what my Alpha Stocks system was designed to do… beat the market and deliver alpha for your portfolio!

So, if you’ve been struggling in this wild stock market environment, with the major indexes down double-digits and many of last year’s leading stocks down over 50%…

Consider checking out my Alpha Stocks trading service, which focuses on only the very best stock trading opportunities — both on the long side as stocks rise and on the short side when markets are crashing.

You’ll get timely trade alerts that have the potential to deliver gains like those I’ve described above…

And we get together every Monday for an hour-long live session so that subscribers can ask questions and get guidance about our trades.

If you’re ready to see what you could be missing out on, you’re in luck!

I’m hosting a FREE Alpha Stocks strategy session today, which you can register for by clicking right here…

I hope to see you there!

Embrace the surge,

Ross Givens
Editor, Stock Surge Daily

Ross Givens
Ross Givens

I bought my first stock when I was 12 years old. It was Microsoft. I’ve been a registered financial advisor. I’ve worked as a stock broker. I ran a managed fund. I was a Vice President at JP Morgan with Series 7, Series 66 and Series 3 securities licenses. I’ve been featured on Fox Business, CNBC, Bloomberg, and a bunch of other networks. The only thing I enjoy more than making money, is helping YOU make money.

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