Breakout Setup Qullamaggie Style Deep Dive | 963 Breakouts Reviewed | Results — Transcript

Full transcript

1. 0:00hi guys, in this video I would like to share  insights from a deep dive that I did on the
2. 0:05breakout setup. To make the Deep dive I use  information shared by Kristjan Kullamagie @Qullamaggie on his
3. 0:13YouTube channel and Twitch that's why I also called  the presentation Breakout Setup @Qullamaggie Style
4. 0:21Kristjan has a very well-defined trading strategy,  he shares a lot of insights on how to identify
5. 0:27the setup, how to trade the setup and I used as  many of his points at the base of my deep dive.
6. 0:35During the deep dive I tried to confirm as  many things for myself in order to better learn
7. 0:42the breakout setup. What you'll see later in  this presentation, is a summary of what I could
8. 0:48find and what I learned while doing the deep dive. There were a set of open questions that I set
9. 0:56for myself and here are the main ones. Of course, I  wanted to know how many breakouts happen per month?
10. 1:02How many breakouts happened in 2022, considering  it was a bearish market? What's the relationship
11. 1:10between the breakouts and SPY? and How they are  positioned when I map them on the SPY? Very good
12. 1:17insights later. Kristjan also mentions the  pattern that the breakouts creates during this
13. 1:25setup and I wanted to learn to draw them  and find them for myself, but also count them to
14. 1:32see how many I could usually find, so more insights  on that too, and then finally, what I try to also
15. 1:39do is for each of the breakouts I came up with  some measurements of the setup and try to
16. 1:48collect the data for all the setups, all  the breakouts that I identified, in order to end
17. 1:56up with a statistical database which  when analyzed will give me a description
18. 2:05of the Breakout setup based on data. This also  comes later in this presentation, so stay tuned
19. 2:14and focused and you need quite some endurance  to go through those slides because there are a
20. 2:20lot of charts. This is what you  could expect in terms of topics,
21. 2:27to me there are very good quality insights ahead.
22. 2:30Overall, here is the breakout setup description as described by Kristjan on his blog, I assume  that you have an understanding of the breakout
23. 2:41setup already, that's why I will not go into the  details. If you want to learn more please pause
24. 2:46the video and read the text. Please have  in mind that there is a survivorship bias
25. 2:55to this deep dive meaning that all the  data that you'll see later in the presentation
26. 3:02does not include any setups that had a similar  pattern to a breakout but in the end failed to
27. 3:10breakout so it has a survivorship bias and a selection bias towards it that you have to have in mind.
28. 3:20There is nothing about the number of setups that failed.
29. 3:28In terms of the studied  universe for the deep dive
30. 3:33how I created the universe is: I selected  stocks above three dollars, there was no
31. 3:40Biotech stock included and no ETF either, and in  terms of timeline of historical data that
32. 3:48I looked into was January 2017 till December 10, 2022  so overall, six years of data. The tool that
33. 3:59I used for this was tc2000 and they actually  store per stock six years of historical data
34. 4:07I ended up having 2578 stocks in the studied  universe which I then split into two main
35. 4:16groups based on market caps. First group,
36. 4:23above 1 billion and below 10 billion stocks,  1 830 stocks, and above 10 billion 748 stocks
37. 4:34and then here is how many breakouts  I could manage to find so a total of 963
38. 4:42breakouts, a very nice number a lot of work  to find them all but and then very nice to
39. 4:49see so many breakouts happening in the last  six years. Then when I grouped them per
40. 4:55market cap, there were 837 breakouts below 10  billion and 126 breakouts above 10 billion
41. 5:07The number of breakouts and how often they  happen was one of the first insights I was
42. 5:13learning while doing the deep dive, as soon as I  finished doing the deep dive in the group below
43. 5:1910 billion and I switched to above 10 billion  I started to see right away something
44. 5:26unexpected in the sense that I was not  finding so many breakouts in the process. I was
45. 5:33surprised that I was looking through a lot of  data and a lot of stocks and I couldn't find many.
46. 5:42I tried to do some calculations to explain this. In a way, if we take below 10 billion, there
47. 5:49were 837 breakouts and in a total of 1830  stocks which gives 0.46 breakout per stock
48. 6:02which actually means that it takes two  stocks to review, to get one breakout, and knowing
49. 6:11that one stock is six years of data when I do the  math it takes 13 years of data to find
50. 6:21one breakout in the group below 10 billion. If  I do the same calculation above 10 billion the
51. 6:28number is way lower so 0.17 per stock which means  it takes 35 years of data to find a breakout.
52. 6:37You literally have to walk through a lot of data  to find one breakout, that was something
53. 6:45I was experiencing and I was surprised of it. It reminded that Kristjan also mentions
54. 6:50that above 10 billion, bigger companies  have way less breakouts and I kind of have this
55. 6:57data to back it up. Indeed this is happening and  yes 63% less breakouts above 10 billion.
56. 7:06In terms of Sectors and Industry this this is  the list of breakouts per Sector and Industry.
57. 7:15I'll not go into details, I advise you to pause  and look at the data and make your conclusions
58. 7:22but this is what I got. Then the first  question was: What is the average number of
59. 7:31breakouts per month in the last six years? What I ended up doing was trying to split this
60. 7:39timeline knowing that 2022 a bearish  market, I tried to see how many happened before 2022
61. 7:48and in 2022 and this is what the numbers were:  13.88 breakouts per month between January 2017
62. 8:00to December 2021, I was very happy to see these numbers. It is actually proving that the breakouts
63. 8:09happen often per month and it's worth looking for  them and they are identifiable so overall very
64. 8:18promising number and very promising to learn the  breakout setup in general, then I looked into how
65. 8:27many breakouts actually happened in 2022 and this  is the first number I came up with 10.7 breakouts
66. 8:35per month in a bearish environment. However, when  looking closely to the data I saw a lot of stock
67. 8:43in oil, gas, coal also having those breakouts and  considering 2222 had this energy context to it,
68. 8:54geopolitical environment influencing the energy  sector I decided to take them out so
69. 9:03this is what I had as a number 7.6 breakouts  per month a much lower number of breakouts
70. 9:11in a bearish environment which is also making  sense so compared to 13.88 in the years before
71. 9:23I then took all the breakouts that  happened in 2022 and place them on the
72. 9:30SPY chart so what you will see is in with  the blue arrow is a breakouts in kind of
73. 9:37all different in this sectors and industries  and actually in Orange I still try to isolate
74. 9:45sort of oil, gas, and coal.I  was very surprised on how the data aligned
75. 9:52and I had a lot of learnings from this picture  itself and I was very happy to do this exercise.
76. 10:00so I'll let you pause and look through the  video itself and make your own conclusions.
77. 10:06I'll go ahead so just sharing one of the insights I took for myself breakouts happen in
78. 10:14clusters it's definitely in 2022 based on the  data that I had so far is these three significant
79. 10:23clusters of breakouts with not so many happening  in between or later in the year when the bearish
80. 10:31environment was even more present so [Music] um  yeah that's kind of something I was not super
81. 10:39happy to see so many like such a clustered form  I was more happy with the average per month the
82. 10:48Clusters in a sense mean that there  needs to be higher risk exposure in some short
83. 10:55periods of time as more breakouts in a sector or  in general on the market happen in the same time
84. 11:05in addition we can also see a kind of sector  momentum breakout which has the same
85. 11:11kind of rule of clustering  in a specific short period of time
86. 11:19What I'll do next, is an analysis for the  full like for the rest of the year so 2017 to
87. 11:292022 so I map all the period to see what  extra knowledge I can gather from the map doing
88. 11:37those breakouts so it's coming soon that's  why I advise you to subscribe to the channel
89. 11:44so that you don't miss that video if you like the  information so far I advise you to like the video
90. 11:50as it supports the channel a lot so a  couple of short conclusions so far after
91. 11:57the breakout setup seems  legit it happens and this was a key insight
92. 12:07during the Deep dive of the setup what was also  expected is to see a correlationship with bullish
93. 12:19environments and more breakouts in a bullish  environment than in the bearish environments
94. 12:27and in addition to this breakouts come in  clusters with a significant correlation with
95. 12:37the overall market and clusters within the sector  here are a couple of insights and more to follow
96. 12:44so let's go through the extra topics I looked  into so another point I was researching was the
97. 12:54pattern that the stock is creating during the  breakout process it's something that Kristjan
98. 13:02highlights in his video like here. The three most  important patterns in stock markets I advise you
99. 13:10to watch that one as well so starting from those  insights I try to identify the pattern but also
100. 13:19draw it and try to count them and so  on, so this is what I found up flat flag, another
101. 13:26one who was the channel, a down flat flag shown  as in the picture below, and a symmetrical flag
102. 13:36so yeah overall four patterns identified  and what you can also see is that the 10 days
103. 13:46moving average always above the 20 days moving  average and pretty insightful to see those
104. 13:54patterns after counting them and trying to group  them per pattern this is what I end up with.
105. 14:02In terms of data, 30% are up flat flag then we have  59% are channels I was very surprised to see so
106. 14:12many channel patterns, down flag in 9% of  the cases and a symmetrical flag in 2% percent.
107. 14:21So this was very insightful to me
108. 14:26Then another thing that's while looking at  the pattern I saw is that 89% of the breakouts
109. 14:36have a at the upper flat line which is actually  the resistance line and this is kind of where the
110. 14:44breakouts setup name comes from. It breaks out  from this line so it gives
111. 14:53a tip this line overall gives a tip on how  to trade this this setup. That's why finding
112. 14:59the level of resistance on the daily and intraday  chart is very significant while trading the setup
113. 15:11All the 963 breakouts together  like grouped per pattern are available
114. 15:18on the link in the description  together with the slides that you
115. 15:22see now during this presentation  and with an additional Excel file
116. 15:26with all the kind of statistical data  that I was collecting per Breakout
117. 15:34Now we go into the difficult part of the presentation, where we have
118. 15:40the statistical analysis of the data. What we see  and what happened, I took again the description
119. 15:47that Kristjan shared and based on it I try to  create some measurements to measure the setup
120. 15:56itself and here is what I kind of came up with  I was highlighting on the breakouts with the
121. 16:03horizontal Orange Line the start of the momentum,  then I looked to measure the first leg momentum,
122. 16:11then in terms of percentage I try to see how many  percentage the stock is doing,
123. 16:22how many days is the sideways move and what  time the stock spends in terms of consolidation
124. 16:32of course I measured then the breakouts in terms  of percentage and it kind of this was the line
125. 16:38the distance between the resistance line  and the highest point that the stock was doing
126. 16:46during the breakout move and then the last one was  the breakout momentum percentage when crossing the
127. 16:5510 days moving average because Christian is  advising to follow the breakouts below the 10 days
128. 17:03moving average, and I try to see how much profit I can maintain if I follow this strategy
129. 17:12here is an example of like a slide where  the print screen of the breakout is so what
130. 17:20you see on the left is daily charts with data on the breakout that didn't happen yet
131. 17:27so that I get used to learn to read  the chart before the breakout actually happens
132. 17:34and then on the right usually is the intraday  chart on the screen but here I added the zoom out
133. 17:44a print screen of the breakouts with the  breakout actually happening and extra
134. 17:49context to it so that I get a better  understanding of the position of the breakouts
135. 17:56All these 963 slides are available on the link  in the description. Here it is what data was
136. 18:04suggesting. The first leg momentum in terms of  days,
137. 18:10and in how many days the breakout is created. The results were that within 3 to 7
138. 18:18days in 72% of the cases, then the breakouts builds itself in the first
139. 18:28leg within this 3 to 7days. Looking at  the first leg momentum in terms of percentage
140. 18:37um here the overall data and for all the  breakouts that happen during this deep dive what
141. 18:45I saw is that there were and I started to collect  this data with like there were breakouts that did
142. 18:5412 percent and then went sideways and then  continued with a breakout move up so I took
143. 19:02for myself as an indicator that if I see  12 % in the first leg, this is already a sign that
144. 19:11there is significant momentum in the  stock, and this may result later uh in a breakout
145. 19:21I also split the same chart to do the analysis  below 10 billion and above 10 billion and as it
146. 19:29kind of expected the bigger companies don't create  a significant momentum in the first leg so what I
147. 19:38saw is and what I expect now is between  8 to 20 % momentum in most of the cases
148. 19:47I also based on knowing the % in the first leg but also how many days it took
149. 19:55to build the first leg momentum I tried to  calculate the average true range which you
150. 20:02see here on the chart. It is not the  average daily range but the true range
151. 20:09in in 79% of cases above 3% it was a good insight overall
152. 20:17As expected above 10 billion and also I saw  that on the charts as well the stocks has
153. 20:25a lower intraday move but also it builds the leg  in a higher amount of days so it takes me not
154. 20:34three to seven but maybe five to nine days to  build the first leg so yeah more insights on
155. 20:42this from the statistical data the sideways move  so the days in consolidation what I saw above 10
156. 20:49billion is a consolidation between 7 to 12 days  in most of the cases. Still there are cases with
157. 20:5813 to 19 days of consolidation so it was  nice to see that too. Above 10 billion is
158. 21:06a bit of everywhere, but still  applies that between 7 to 12 days
159. 21:13is where most of the consolidation is  happening and then follows the breakouts
160. 21:19the most interesting part is of course breakout % stage of trading, so here what I saw is that
161. 21:27in 76% of the cases, there was a breakout  of higher than 16% and if I look at below
162. 21:3810 billion there's a widespread variety of  breakouts and above 10 billion uh what we see
163. 21:45is that there is not such a significant momentum  burst.So what we see is between 8 to 22 percent
164. 21:56and the last one in terms charts is  the stop-loss assuming that I will follow the
165. 22:04breakout below the 10 days moving average. This is  what we could see from the data
166. 22:13here is the breakouts a percentage and this is the  chart in red is the stop loss percentage so in 60%
167. 22:23of the cases the breakouts has stopped below 16%. I will let you pause and think about this data
168. 22:34and how it can influence your trading strategy but  this is what the data was showing. An extra thing
169. 22:41that I tried to do was to summarize the percentage  of momentum in the first leg the breakout and
170. 22:48below the stop-loss to see what I will   end up having if I just summarize all of them and
171. 22:58the data was very interesting. When I was  trying to split the breakout momentum compared
172. 23:05to the first leg there is surprisingly a good  symmetry in the data and it's like 106 percent
173. 23:15The difference percentage-wise shows a significant symmetry in the stock
174. 23:22so whatever you could expect in the first  leg is what you could also expect in the breakout
175. 23:30in addition, to this if we follow the breakouts  with the stop loss before the 10 days moving
176. 23:39average what I made as a conclusion  for myself was a loss of 40%of the profits
177. 23:53There's more  to it but yeah, this is what those calculations
178. 24:02showed and here is how the statistical data  will describe the data the setup based on the
179. 24:08information that I could gather. The breakout  setup is creating itself within three to seven
180. 24:14days of momentum. There should be at least  12% percent momentum in the first leg to
181. 24:23count on a breakout later in the process. Of course  higher momentum is better
182. 24:31but at least 12% already shows a  good momentum. then there is a consolidation
183. 24:38period and the sideways move between seven to  12 days followed by a breakout of at least 16% in 76% of cases
184. 24:47there is a loss of 40% of the profits if we follow with
185. 24:56the stop loss below the 10 days moving average.
186. 25:03Breakouts classifieds with the full list of data is available  on the link in the description and here are
187. 25:16the the last insights following this deep dive: overall the setup is legit. There is definitely a
188. 25:25correlation with the overall market and way more  breakouts in the bullish environment. There is
189. 25:32that element of clusters that are created within the overall market but also within sectors
190. 25:42In 89% of the cases the breakout setup pattern  itself gives a good tip on the trading strategy
191. 25:5212% momentum in the first leg is a good  sign that therecould be a potential
192. 26:01breakout later and in 76% of the breakouts  there is higher than 16% opportunity for profit
193. 26:13have in mind all this study was done with a selection bias.
194. 26:19The data is applicable for the breakouts that  actually happened. If you like the presentation
195. 26:24don't forget to give it a Like and Subscribe. There is also that analysis on the six years
196. 26:32of data and mapping of the breakouts coming  later so subscribe to not miss that part.
197. 26:40Check the website mastertradingflow.com to learn more. Thank you!
198. 26:45Last one, some suggestions for the YouTube channels of  course @Qullamaggie's YouTube channel is super
199. 26:54resourceful on the breakouts and in addition  I advise you to look the @tradingarchive2702
200. 27:01YouTube channel, because there are a lot of  good playlists on the setup as well
201. 27:12Thanks a lot! Wish you good luck trading! Surfe the momentum wave like a Pro!