How to identify Long-Term Multibaggers

In this blog, we will find out the factors that are important for finding long-term multibaggers by using an example of HEG and Graphite India. Here’s a chart of HEG which shows a gain of 28x in 2 years.

To see this, we will use a feature called “Auto-SR based on Current Cursor” to see how the chart of HEG looked at the time it started its upward move of 28x in 2 years.

Lets start by enabling Auto-Support/Resistance by right-click-ing on the chart and then selecting “Enable Auto-SR”. Then select “Auto-SR Options”. Then  select “Auto-SR Based on Current Cursor” so that the Auto-SR lines are dynamically drawn based on where the current cursor is (i.e. using the past 240 bars exclusive of current cursor). This is a great way to visually backtest Auto-Support/Resistance and related features. Also ensure that “Enable Auto-SR Zones” are enabled in this menu.

If we navigate the cursor to 22/2/2017, we see that HEG did a volume breakout of not only a very strong resistance but also the Auto-Supply Zone (as shown by the red zone in the chart below).

No long-term uptrend succeeds without a prior long sideways trend. So, also make sure that there is a long sideways trend preceding the volume breakout, as shown below.

And finally, excellent fundamentals are extremely important. A long-term multibagger has exceptional growth numbers like the EPS Growth% and Sales Growth% that are exhibited by HEG (and also Graphite India) currently and also at the time of volume breakout.

To summarize, the following factors are very important to identify multibaggers:

  1. Very Strong Resistance Breakout (Or Supply Zone Breakout) on High Volume.
  2. Long Sideways Trend
  3. Excellent Fundamentals

You can identify such multibaggers by monitoring the “Potential Buys Breakout” scan which will help identify stocks with very strong volume breakouts. Soon, we will also be adding the support/resistance zone breakouts as a scan which will also allow finding stocks doing zone breakouts.

Check out our video on “How to find Multibaggers like HEG & Graphite India with Auto-SR based Volume Breakout Strategy” (Watch in Hindi/Watch in English)” for an in-depth look into this topic!

 

Identifying Short-Term Multibaggers with Auto-Support/Resistance

In this blog, we will find out how to find stocks with short-term gains of > 30% by using Auto-Support/Resistance volume breakout strategy on examples of a couple of stocks.

Here’s a chart of Venus Remedies which shows a gain of 55% in 4 days.

Lets start by enabling Auto-Support/Resistance by right-clicking on the chart and then selecting “Enable Auto-SR”.

This draws the Auto-Support/Resistance lines. The dark blue lines are very strong resistance lines and any break of that can be considered a stronger buy signal compared to a light blue one. As we can see, Venus Remedies did a Very Strong Resistance breakout along on very strong volume on 16 Nov, 2018. If you bought it at the opening price of Rs 44, that would be a phenomenal short-term gain of 55%. The question is how can we catch such breakouts.

Venus Remedies Volume Breakout

 

Many of the times though, the stock surges so much above the resistance breakout point that it becomes difficult to chase it afterwards.

So  let’s look at another example of Kesoram Industries. This stock also did a similar breakout around the same time and would have showed up on 21st Nov, 2018, in the “Potential Buys Breakout” scan.

To find out how we can capture a stock surge like that early,  you need to look at the stock chart in multiple timeframes.

When we look at a 2-chart layout in multiple timeframes, we see that the stock actually broke out on a 15-min timeframe first and the volume surge and breakout also reflected in the Daily timeframe after a short while within a few bars, both on above average volume, as shown in the chart below.

 

Both the stocks also exhibited a sideways trend of 1-2 months before they shot up, so that is also a good filter to eliminate false breakouts. And finally, always ensure that the stock has a high risk-reward ratio

To summarize, the following factors are very important to identify short-term multibaggers:

  1. Very Strong Resistance Breakout (Or Supply Zone Breakout) on High Volume.
  2. Long Sideways Trend
  3. High Risk-Reward Ratio (i.e. high reward compared to risk)

But, beware, such short-term volume breakouts can be short-lived and one should always make sure to take profits when it reaches a target. The target can be derived again from an auto-resistance level above the current price. E.g. in case of Venus Remedies, it so happened that the stock started reversing at the auto-resistance level of Rs 68 (as shown by the light blue line in the chart above).

Check out our video on “Identifying Short-Term Multibaggers using Auto-Support/Resistance” (Watch in Hindi/Watch in English)” for an in-depth look into this topic!

 

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