Hunting For Breakouts
Blazing My Own Trail: Hunting Pre-Breakout Stock Patterns
By Shane Shipman, Independent Trader
I've come to realize the market rewards people who build their own systems instead of just following everyone else. For the past few months I've been working on a custom pattern scanner that looks for stocks acting like they do right before a big breakout — that quiet, coiled-up phase. I combine it with a simple Finviz filter: stocks near their 52-week lows but showing some real strength (better volume or positive price action). It's given me some really interesting results.
It's not perfect and it's definitely not revolutionary, but it's mine. I use historical patterns that look similar, then let algorithms help manage the trades. Lately though, I've started noticing other setups that could work really well alongside what I'm already doing — without making everything more complicated.
My Main Setup: Near 52-Week Lows With Hidden Strength
My scanner hunts for stocks that could be getting ready to reverse or start accumulating:
- Near their 52-week lows (or bouncing around that area).
- Showing signs of life — stronger volume, green days, or holding support when the market is weak.
- Matching past "pre-breakout" patterns in shape and volume.
These setups have been working because they catch the moment when smart money starts quietly buying. I look at similar patterns from history to get an idea of what might happen next. I keep it practical by only looking at stocks with decent liquidity and watching the sector.
New Setups I'm Getting Excited About
Looking beyond just the lows has opened my eyes to some really good opportunities. Here are the ones that stand out:
1. Volatility Contraction Patterns (VCP) — The Coiling Spring
These are stocks (usually already in an uptrend) where the price swings get smaller and smaller, and volume dries up. It's like the stock is tightening a spring before it launches. Mark Minervini talks about these a lot.
I'm now adding this to my scans. Tools like TrendSpider can spot them automatically.
2. Strong Stocks Near 52-Week Highs
Instead of only looking near the lows, I'm also scanning for stocks that are close to their highs but pulling back a little and getting quiet. These momentum stocks in healthy consolidations can give cleaner moves than bottom-fishing.
3. Better Pattern Matching & Multi-Timeframe Checks
I'm improving how I match historical patterns (using code with IBKR data) and adding weekly or monthly confirmation. This helps filter out the weaker setups.
4. Useful Tools That Save Time
- IBKR's AI Screener & Trading Central — I can just describe what I want in plain English.
- TrendSpider — Automatically finds VCP, flags, wedges, etc.
- Trade Ideas, ChartMill, and Deepvue for other good ideas.
What I'm Learning
Sticking only to near-low setups meant I was missing some of the strongest stocks that coil near their highs. Combining both approaches gives me more chances without overcomplicating things.
I'm just iterating and testing smarter now. If you're building your own scanners or testing patterns, I'd love to hear what’s working for you. Drop a comment below!
Published: May 10th
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