New highs. There is a difference between a new high and a 52 week high. Let me explain.

A new high is just that, a stock that has achieved a price level it's not seen before. A 52 week high is "just that" too, it's a stock that has reached a level not seen in the last year. Are either important? Yes indeed and here's why. People for the most part like to travel in packs, go with the flow, follow the leaders. So, as mom and pop America settle into their lazy boys in the evening and open the paper, they see headlines like "XYZ hits new 52 week high!" That gets their attention.

So, we often see a stock that has put in a 52 week high, get "another push higher" as the late comers want to join the party. But it's not really that easy is it? No, it never is. What we do like to look for however is a stock that is just about at a 52 week high. Let's say a stock hasn't seen 52 in a year. Now it's trading at 51.85. chances are pretty good that they will challenge 52 and chances are they will get past it, at least for few moments.

For someone who has good trading skills, taking a chance as they first cross over that new high area is a decent risk/reward scenario. Often these situations bring in more buyers and the stock makes the move. But, if you look at enough charts you also see that it's very common for the stock to test that breakout, by settling down to the new high level. Then it becomes a war between shorts who think it's shot it's wad versus the longs looking for a blue sky breakout. So, buying the initial move will usually reward you, but then often you are better taking that profit and waiting to see if indeed they are going to let it survive at it's new level.

If it does hold up, then chances are really good it 's going to continue moving higher. A good way to play it is not the high on the day it moves over it's 52 week high. If it attains that level again, and exceeds it, that is a green light that it's got some strength behind it. The chances are very good that it's going even higher. So, keep an eye on the new 52 week highs folks and especially keep an eye on those that make one and then fade off. The next push higher could be the golden ticket.

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