How to Pick Stocks Gaining 6.5% in a Day (CLS)

When I look to buy stocks, I never expect huge gains in the next few days. Celestica stock did just that, gaining 6.5% yesterday while I bought 800 shares of CLS stock 2 days ago! Last week’s candlestick has been a doji – almost a gravestone doji which is considered an important bullish reversal signal – confirming once again the support level at $8.00. This week’s candlestick is confirming up to now the reversal pattern, since the high is higher than the doji’s high. So, if you are interested in finding out how to pick stocks that will perform well the next few days, candlestick patterns on major support or resistance levels will do the trick.

Order to buy CLS stock on 29th of June - Weekly chart

What indicators did I use to pick my entry point regarding the Celestica stock? First I considered the RSI indicator in the daily stock chart, which was lower than 30, meaning the CLS has been oversold and buyers will begin controlling the market. Apart from the obvious support level pointed out in the weekly chart along with the doji candlestick, I also liked the higher lows in the monthly chart. CLS stock’s 10-year high has been about $85 and nothing rules out a very long-term uptrend to that level. Yesterday’s news included a Celestica upgrade from “Hold” to “Buy” by Deutsche Bank.

Regarding the money management if my trade, I used the support level to set my stop loss ($7.75). Now that Celestica stock has confirmed the bullish reversal, I’ll be moving the stop loss to breakeven point ($8.25) and I expect to trade out at $10 (almost a 4-1 reward-risk trade). However I’m contemplating against selling all of my CLS shares, letting 20 or 30% of my position run in case the stock tries for new highs.

Disclaimer: I’m long CLS.

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