Reader Matt writes:

Hi, Gary,

I know you like breakouts on strong volume, but do you think there's such a thing as a breakout that's too high? If so, where do you draw the line? For example: MW was up today about 18%. Is that too high a percentage? Should you jump in, wait for a pullback, or avoid the stock entirely, particulary since the action looks slightly "V"-ish?

Thanks,

Matt

Matt, this is an excellent question and I’ve looked at it a lot.  However, in extensive testing, there is no correlation between the size of the breakout and the success of the trade.  Intuititvely, you’d think there would be, but I’ve not found that to be the case.