“It’s Already Gone Up Too Much.” Look Again.
Sometimes, the move that makes you dismiss a stock is the move that should put it on your watchlist.
Look at Pharmacyclics (PCYC) in this 2010 chart from Mark Minervini’s book. The stock had already made a powerful advance before settling into a tight, sideways pause. While the Nasdaq was selling off toward a correction low, PCYC was holding up remarkably well.
That’s a form of relative strength. The market was struggling, but the stock was refusing to give back much ground.
When the market bottomed and started turning higher, PCYC was already breaking out to new highs. Notice where Minervini marks his purchase. He wasn’t buying the bottom or chasing the initial surge. He was buying as the stock emerged from that tight consolidation.
A lot of people look at the earlier advance and think, “I missed it. It’s already made its run.” But that strength can be the first evidence of a potential market leader, not proof that the opportunity is over.
There’s a difference between a stock that has already made a big move and a stock that is extended from a proper entry.
The prior advance gets my attention. The way the stock handles its next pause helps determine whether there’s a trade. Does it hold up while the market weakens? Does it tighten up rather than fall apart?
This is exactly what I still look for today. Many of the stocks I’ve shared had already made substantial advances before forming their next setup. During that quiet pause, when other people lose interest and move on, I’m often paying closer attention.
Not every setup works. But the same patterns and characteristics continue to appear.
Don’t automatically cross a stock off your list because it already ran. Watch what it does next.
