Advanced Auto Parts (AAP) — a breakout from a breakout. Buy or sell?

Just a real quick comment about Advance Auto Parts ( NYSE:AAP ). This has had a monster gap here, it’s held the gap and now it’s breaking out. You would think that this stock would pullback on profit taking, that’s what I would think, right? Well, that’s not the way I trade. When a stock breaks out like this it’s a momentum buy. You look at the weekly chart, we’ve seen this kind of chart before; Whole Foods ( NASDAQ:WFM ) kind of looked like this, Google ( NASDAQ:GOOG ) looked like this, we’ve seen a lot of stocks that look like this sometimes, and they tend to go higher.

So this was a monster move today, almost 4 percent. It depends on what you’re holding period is, if you’re a real swing trader then I would only buy this stock if it’s higher than today’s high of 107.24, that’s when you really buy this stock. If the stock opens up tomorrow and doesn’t eclipse that high in the morning, then you don’t want to buy it. But, if the stock pulls back a bit, then you want to buy it.

So what I’m saying is, if you’re a breakout buyer wait till the stinking thing has broken out, I don’t mean today, I mean tomorrow. Wait till it prints a new high, because if it doesn’t do that then by definition it’s below this level, right? So you watch it and see how it acts right around 104.00 or so. And then if it firms up there, then what are you getting? You’re getting a price pattern that looks like that, and then you look for a bounce higher, something like that, we’ve seen this price chart all the time. So this is the type of thing you want to look for on Advance Auto Parts ( NYSE:AAP ).