Breakouts Map 2017-2022 | 963 Breakouts creating The Big Picture — Transcript

Full transcript

1. 0:01hi guys in this video I would like to  share a breakouts map which was built
2. 0:06based on historical data from 2017 to 2022 a  small segment is represented on the screen and
3. 0:14later in the video I'll share more details on  how it was built but also more importantly what
4. 0:19were the key learning points that I could  collect while doing this mapping exercise
5. 0:25the main open questions covered later in the video  are as following how many breakouts happened per
6. 0:31year from 2017 to 2022 can the bullish or bearish  Market environment significantly influence the
7. 0:39number of breakouts what sectors produce the  highest number of breakouts and the last one
8. 0:45is sector rotation significant enough to be  considered into the breakouts trading strategy so
9. 0:51overall four main open questions and four topics  I look into while doing this mapping exercise
10. 0:59a small recommendation on my side will  be for you to watch the breakout setup
11. 1:05kolamagi style deep dive video first  this video is available on the channel
12. 1:11um the video you are watching now comes as part  two and a continuation on the data interpretation
13. 1:18from the deep dive that I did on the breakout  setup that's why it's advised for you to watch
14. 1:24this video first as a small reminder and to add a  bit of context during the Deep dive was selected
15. 1:32a total uh of 2578 stocks in the universe and  then the universe was split in below 10 billion
16. 1:41group and above 10 billion group what all these  stocks had in common was the price above 10 three
17. 1:49dollars an average daily volume more than  a hundred thousand shares no biotech and no
18. 1:57ETF where stocks were selected in the universe  the timeline of the historical data that was
19. 2:05studied during the Deep dive was January 2017  to December 2022 using the tc2000 tool a total
20. 2:15of 963 breakouts were identified with 837 in the  below 10 billion market cap group and a total of
21. 2:25126 breakouts in the above 10 billion Market  group as soon as I had the 963 breakouts the
22. 2:35first point was to see exactly when their breakout  happened and while adding this on the timeline I
23. 2:44was able to answer the first question how many  breakouts happened per year from 2017 to 2022
24. 2:52here are the results and this is the first  learning point while doing the exercise I could
25. 3:00see right away that in 2020 and 2021 happened  an unusually higher number of breakouts than
26. 3:08the previous years it's kind of more than double  that's why this was the first chart that changed
27. 3:15my expectation in terms of the number of  breakouts and the occurrence of breakouts
28. 3:21per year a more realistic expectation will be to  have between 110 to 140 kind of breakouts per year
29. 3:34I was also counting the average number of  breakouts per month and per at year level
30. 3:42the numbers are as following however soon after I  understood that uh breakouts do not have an even
31. 3:50repartition as a result it's not a good logic to  track them based on an average per month indicator
32. 4:00to prove this point in more details here is the  grand total of breakouts from 2017 to 2022 at
33. 4:11monthly level and what you see right away is is  spikes at monthly level with a lot of breakouts
34. 4:20in some of the months and almost no breakouts  as we see for example here in October November
35. 4:27December 2018 for three months in a row there were  no breakouts so due to this spikes and occurrence
36. 4:37of breakouts I kind of came to the conclusion  that there is an irregular repartition of
37. 4:42breakouts during the year most likely you already  saw the crazy environment of 2020 2021 with a lot
38. 4:52of breakouts happening we'll get back to that  period of the chart later in the presentation
39. 4:59the next question I looked into was can  the bullish or bearish Market environment
40. 5:04significantly influence the number of breakouts  in the next slides I will share the charts and
41. 5:11the maps of breakouts map themselves they are very  heavy in data that's why I advise you to pause the
42. 5:18video first review the data for yourself make  your own due diligence and your own conclusion
43. 5:24and then hear my perspective as well so pause  the video if needed uh here is an example of a
44. 5:30breakouts map in this case it's 2017 and this  is what I actually did I took the Spy charts
45. 5:37ETF and on it I added for every breakout and  arrow in the day when the breakout happens and
46. 5:47there is also a color coding to it based on the  sector where the breakout is coming from so and
47. 5:56the list of sectors are listed on the bottom what  we can learn from the data of 2017 is the presence
48. 6:04of clusters within and between sectors it's very  well defined and evident on the data the presence
49. 6:14of these clusters what is also nice to see on the  2017 map is breakouts happening once every couple
50. 6:24of days showing a good momentum on the market  and a good overall sentiment in the on the market
51. 6:34next this is the 2018 breakouts map and here  is what I highlighted for myself a bearish
52. 6:45environment at the beginning of 2018 with almost  no breakouts uh at all then what I saw and this
53. 6:56is what I call now leading breakouts and lagging  breakouts is clusters or breakouts that happen for
54. 7:03example in the case of leading breakouts I call  them like this because they formed as breakouts
55. 7:11and then went sideways in an Market environment  that was bearish or very choppy as a result and
56. 7:21then they had a breakout even without a clear  confirmation from the overall Market that's
57. 7:28why I call them leading breakouts and then you  see the lagging breakouts which wait for for an
58. 7:35overall Market confirmation and we see that on the  charts by having a first leg then a consolidation
59. 7:41and then we see more breakouts happening  um I call this situation lagging breakouts
60. 7:51and then last Point highlighted on this  chart was a bearish environment and Market
61. 7:56correction end of 2018 for a couple of months  where we see there are no breakouts at all
62. 8:06this one is the breakout map for 2019 again  nice to see a nice good repartition of breakouts
63. 8:14every couple of days breakouts happening a  good sentiments on the market good momentum
64. 8:20and here's what I highlighted for myself  um we see beginning of 2019 after we come
65. 8:29from a bearish market the markets overall  in showing a momentum and then we see the
66. 8:36lagging breakouts also showing additional  momentum and having the breakouts that was
67. 8:44what I highlighted the 2019 data shows also a  breakouts cluster within a sector in this case
68. 8:52it's the healthcare sector no biotech included but  very nice and evident sector momentum happening
69. 9:03another Point what is and I thought that I wanted  to highlight is the absence of breakouts can be a
70. 9:10first sign of potential Market correction ahead  and this is an example of this happening so
71. 9:16almost no breakouts and then a correction ahead  something kind of similar happening here as well
72. 9:22with no breakouts correction ahead next one  as a chart is the breakout map of 2020 and we
73. 9:35see this crazy environment that happens in the  2020-2021 period so what I highlighted on this
74. 9:43chart a bearish environment and again no breakouts  in the period of February March April of 2020
75. 9:51and then a very very important Point actually  the it's something that you can could see also
76. 9:59on the previous charts but I wanted to highlight  it here because it's very visible all across
77. 10:05the year the 10 days moving average above 20  days moving average on spy is a very favorable
78. 10:12environment for breakouts and we see we will see  that again and again on spy and this is a very
79. 10:19strong indicator on the uh for on the markets  especially for the breakout setup something to
80. 10:26definitely have in mind and the watch for  the 10 days above 20 days moving average
81. 10:34um and then this is like the most crazy  part when I was building the the charts
82. 10:41and adding the breakouts on on spy it was  a crazy experience to see so many breakouts
83. 10:51happening especially in the period of December  January February so when I was adding them the
84. 10:57data was unveiling in such an unexpected  way and such a crazy number of breakouts
85. 11:04with a fifth and 6th and January 2021  being the crazy day possibly in the last
86. 11:11100 years with a total of 40 breakouts  happening in Within These two days alone
87. 11:19yeah it was a very interesting exercise  and I was very happy to do this mapping
88. 11:25and to get this better understanding on how the  breakouts looked like and when they happened
89. 11:32guys if you like the information you see so  far please give it a like And subscribe as
90. 11:37it motivates and helps the channel a lot foreign  next one thank you next one January 2021 so from
91. 11:492021 what we see on the breakouts map and here's  what I highlighted for myself so again absence
92. 11:56of breakouts in this case it's not so evident  there are more breakouts happening here but the
93. 12:02absence of breakouts signaling a correction kind  of ahead and then of course here what we know as
94. 12:09the peak of the bull market of 2021 and the start  of the bearish environment uh significantly less
95. 12:16breakouts in November December January November  December 2021 followed by the start of the bearish
96. 12:25environment again breakouts kind of signaling  the loss of momentum and a potential downturn
97. 12:37um another point I highlighted based on 2021 data  was the significant intraday clusters we see that
98. 12:45um within the same in this sector but also we  see couple of sectors in a breakouts momentum
99. 12:54and a cluster here the same situation and  as a learning point from it is the fact
100. 13:01that while we see breakouts happening in  one or two of them stocks it's a good idea
101. 13:07to look at other stocks in the same industry  or sector to see if there is a good momentum
102. 13:15built up in those stocks as well or if there  is already a setup in those stocks building up
103. 13:24and finally the 2022 data it's the year that we're  very familiar and still remember uh what happened
104. 13:34um and I personally have a lot of the backgrounds  on on this year in particular so what we can see
105. 13:43here significant energy sector momentum of  course it was February March 2022 when we
106. 13:50saw an uh a very high energy sector momentum  it was due to geopolitical reason supply and
107. 13:58demand but Looking Backward it was such an  evident detector momentum so I highlighted
108. 14:05that on the chart and this is in the context  of such a bearish environment the energy sector
109. 14:11showing so many breakouts so that was something  unusual for even the last six years of data
110. 14:19then again highlighting the points that 10 days  moving average about 20 days moving average is
111. 14:26a very important condition for breakouts to  happen we saw that in 2022 in the moment when
112. 14:3310 days moving average was about 20 it was a  favorable environment for breakouts to happen
113. 14:41what else I highlighted was again the presence  of leading breakouts those that happened even
114. 14:47before spy showing a strong momentum and the  lagging breakouts that happened after a better
115. 14:56confirmation of momentum in the overall Market  um and of course two bearish periods of 2022
116. 15:06um significantly well defined with almost no  breakouts here is side by side the chart on
117. 15:14the left is despite TF and I wanted to share  the energy sector ETF chart to see how big of
118. 15:24a difference and how different is the story that  each of the chart is saying a spy on the left is
119. 15:33showing a very bearish environment choppy Market  unstable Market while the sector momentum is so
120. 15:41was so well defined and honestly I missed this  chart at that time but the sector momentum was
121. 15:48so like for energy sector was so well defined and  there were so many breakouts actually happening
122. 15:58on this slide uh I took the bearish segments of  the market and put them side by side to highlight
123. 16:07the point of the low number of breakouts that  actually happened in a bearish environment
124. 16:14like the period of January February March 2018  still has a a number of breakouts but later we
125. 16:26see Market correction and bearish environment with  absolutely no breakouts another point to highlight
126. 16:33here is the month the number of months of bearish  environment so in this case it was a bearish
127. 16:42environment from September till January so like  four or five months of bearish environment when
128. 16:48you have to wait for the right Market environment  and completely stop trading the breakout setup so
129. 16:57a very good learning experience of course now  having the experience of 2022 and the bearish
130. 17:03environment what an important takeaway and I wish  I could do this sooner regarding the performance
131. 17:10of the breakouts set up in a bearish environment  another point to Highlights maybe it's not such
132. 17:18an evident good idea but what I saw is that  the breakouts occurring every couple of days
133. 17:24can suggest that the market is in good health we  see that on the 2017 data and 2018 where every
134. 17:33couple of days we see breakouts happening which  is suggesting a good overall momentum sentiment
135. 17:40in the market also in the lower cap environment  where usually most of the breakouts happened so
136. 17:48yeah it's like the breakouts can serve as a kind  of a diagnosing tool for the markets where they
137. 17:55are kind of like a heartbeat of of the momentum  and the health of this Market sentiment overall
138. 18:02so an interesting point to highlight and then from  it also comes an idea it's actually a good idea to
139. 18:12kind of develop a process and track every week  how many breakouts happen in different sectors
140. 18:18because this can't suggest the appearance of  momentum or the lack of momentum in the market
141. 18:28all the breakouts and all the print screen that  are shared in the presentation for spy but also
142. 18:35for all at individual sector level all of them are  available on the link in the description in case
143. 18:41if you want to make your own due diligence and  study them in more details they are available for
144. 18:48downloads on the link in the description share  a couple of insights and some learning actions
145. 18:56following this mapping exercise so of course  breakouts come in clusters within with significant
146. 19:02correlation with sector or Market momentum there  is enough data for the last six years to prove
147. 19:09this point and then what I took as a learning  action for my side is to gain sector perspective
148. 19:14and look at what other stocks in a sector industry  are doing to confirm presence of momentum so I'll
149. 19:21try to do that more of this in the future then  it was clear the difference in the number of
150. 19:27breakouts in a bullish and bearish environment  and the kind of learning point and action I took
151. 19:33for myself was to have a more aggressive on and  off modes and be ready to increase significantly
152. 19:41the Explorer when the market is favorable and stop  trading even for months when the market conditions
153. 19:48are not there especially all also coming from  their trading experience of 2022 this is such
154. 19:57an important learning point to stop trading even  for two three months a specific setup in this case
155. 20:04the breakout setup because the market is not  there and the market conditions are not right
156. 20:12so yeah that and then overall the breakouts and  spy relationship and the signal that comes from
157. 20:21Spy what I took as an action for myself was to  create a processes to track stocks individual
158. 20:28at individual level think within a sector context  and trade the setup there are situations when a
159. 20:36lot of breakouts happen even if spy didn't do much  it's something as personal that sounds logic but
160. 20:44after looking at the data it gave such a clear  confirmation and it was such a clear takeaway
161. 20:50spy is Created from bigger cap companies and their  signal and their move on the market is weaker and
162. 21:00what I learned from the deep dive is that most of  the of the breakouts happen by far in the below 10
163. 21:07billion companies and those are smaller and they  grab the momentum much faster that's why always
164. 21:17following Spa AI can be like kind of misleading  and you have to have processes to track stocks
165. 21:24at individual level where spy is most useful  is of course bearish Market Market Corrections
166. 21:30because this is where there is a significant  correlation but and of course to see the 10 days
167. 21:38moving average above 20 on spy is also as useful  elements but in addition make sure to track and
168. 21:47follow the price action at individual stock level  as many breakouts happen kind of in the background
169. 21:56next question I would like to cover is what  sectors produce the highest number of breakouts in
170. 22:01this case I would like to go into the table that  sounds a bit complex but it's share it has some
171. 22:07important points that I wanted you to know the  First Column are the sector name the second column
172. 22:14is the number shows the number of um stocks per  sector and gives a better understanding on how big
173. 22:24each of the sector is all these stocks are above  one dollar and the data source is stockcharts.com
174. 22:33um the third column represents the studied  Universe part of the Deep dive and then next thing
175. 22:39what I did is to understand how well represented  is each of the sector in the Deep dive and I was
176. 22:46surprised actually to see such a low number and  I try to double check the data to see what caused
177. 22:54such a significant decrease in the Deep dive  study at least and actually it's the average
178. 23:02daily volume above 100 000 that significantly  decreased the number of stocks eligible for the
179. 23:11study so overall this if this is happening I'm  kind of happy with it I will not trade stocks
180. 23:19breakouts set up in stocks below 100K so if this  is the case then I considered data relevant what
181. 23:28I learn and what you see right away also from the  last column of the table is five sector produced
182. 23:34significantly more breakouts than the rest and  breakouts can highlight sector momentum we saw
183. 23:43that with the example of energy sector by far the  most evident sector momentum in the last six years
184. 23:53next question I looked into was is sector  rotation significant enough to be considered
185. 23:58into the breakouts trading strategy to do that I  try to do the map at monthly level for each sector
186. 24:08and this is how so that I can identify also some  sector momentum and how uh Acro during the years
187. 24:16this alternation between sectors is happening and  is there such an uh kind of alternation between
188. 24:23sectors um so here's what I saw the first  one technology consumer discretionary very
189. 24:32um significant kind of correlationship with  technology so kind of doing the same but I
190. 24:41was also surprised to see there is no breakouts  happening in 2022 in this sector the next one
191. 24:49industrial sector with a nice number of breakouts  in 2022 even considering it was a bearish market
192. 24:57next one energy of course the significant momentum  of the last two years very evident here also in
193. 25:04terms of the number of breakouts that happens and  the last big sector creating breakouts Healthcare
194. 25:10with a bit of breakouts kind of in all all the  time and what we see 2022 surprisingly a high
195. 25:19number of breakouts maybe because Healthcare  is a defensive sector and it was traded more
196. 25:27considering the bearish environments what you'll  see on this slide are the next six smaller sectors
197. 25:35in terms of the number of breakouts Financial for  example is still a very big sector with I think
198. 25:42more than 800 stocks within the sector but the  number of breakouts happening in the sector not
199. 25:48so much also here the scale is changed here is 0  to 10 the previous one was 0 to 30. so here's what
200. 25:57we see Financial materials consumer communication  Services real estate Staples and utilities overall
201. 26:09this is the display of breakouts in the bottom  six sectors I'd advise you to pause and review the
202. 26:17data make your own conclusions but overall a small  number of breakouts I'd like to put side by side
203. 26:26again the charts in terms of spy and energy sector  by far in the last six years if I'll consider this
204. 26:34idea of sector rotation and sector momentum by  far the energy sector was the one showing the most
205. 26:42significant kind of sector momentum against the  overall Market which was bearish in the previous
206. 26:52years most of the time the sectors kind of go  together and there is a good synchronization
207. 27:01so I couldn't say that the sector momentum  is a very strong strategy in the breakouts
208. 27:09um set up but it's still something to take  into account and to look for when scanning
209. 27:15for the breakouts to see if there's two or three  stocks identified coming from the same sector
210. 27:23the last insights following this mapping exercise  here is the first one of course like I said it for
211. 27:32myself to decrease my expectation and kind of  forget 2020 and 2021 it was a crazy once in a
212. 27:40hundred years time markets and not sure we'll  see that soon so now I kind of expect between
213. 27:48100 to 140 breakouts per year and I will adjust my  trading strategies accordingly to this expectation
214. 27:57then and a very important Point highlighted during  the mapping exercise this idea of on and off modes
215. 28:07and waiting for the right what how important is  to wait for the right market conditions we saw
216. 28:15that the bearish environment it's also logic but  the bearish environment has doesn't give almost
217. 28:23any opportunity for to trade the breakout  setup that's why not trading for three
218. 28:31four five months is something that I have  to learn as a Trader when it comes to the
219. 28:38um breakout setup the last one trade  the setup uh and follow the price action
220. 28:46especially because most of the breakouts  happen in the low to mid cap markets
221. 28:52um like group and watching for the spy and the  confirmation forms spy can not always be a good
222. 29:01idea so spy can have a weaker signal than the  rest and also what I saw there are also these
223. 29:09elements of leading breakouts and considering  this what making individual stock level processes
224. 29:17following the price action watching for the  setup and trading the setup is very important
225. 29:25and the breakouts map where it gave a lot of  learning points and coming soon is the episodic
226. 29:34pivot setup map for the same time period 2017  to 2022 that's why if you like the this video
227. 29:42please give it a like And subscribe so that  you don't miss the next video coming soon on
228. 29:48the episodic pivot map I'm also curious to see how  the data will align on spy on the episodic pivots
229. 29:58thanks a million for your likes subscribe  subscription your comments and all the
230. 30:04feedback you gave me on discords Twitter  or other forums uh wish a great day peace