How We Gained +70% in Livongo–Despite Missing the First Breakout [$LVGO]

Source: Livongo

It’s easy to feel you’ve “missed out” when a hot stock breaks out without you in it, but the next low-risk buying opportunity is often just around the corner. Here’s how we entered $LVGO and rode it to a +70% gain—despite missing the initial breakout.

After the broad market formed a bottom in mid-March, Livongo Health ($LVGO) was one of the first stocks to show market-leading strength in the new market uptrend.

$LVGO gapped above the high of its base on April 7—just one day after our market timing model issued a new “Buy” signal in the NASDAQ.

From that initial April 8 gap, $LVGO rocketed higher and doubled in just 25 trading sessions!

We mentioned the potential buy entry to chat room members when $LVGO broke out on April 8, but missed the gap up for an “official” Wagner Daily swing trade buy entry.

Although it’s never fun to miss an explosive move in a must-own stock, we took comfort in this important fact:

The first big rally after a breakout (from a lengthy consolidation) is often the beginning of a new trend—NOT the end of one.

As such, we kept a watchful eye on $LVGO for a pullback that would lead to a low-risk buy buy entry in our Wagner Daily model portfolio.

After chopping around in a tight range for a month, a low-risk buy point emerged on June 16 (false breakout followed by a few days of tight-ranged price action).

Tight price action just above the 20-day exponential moving average presented an early entry over the two-day high, rather than waiting for another breakout to a new high.

Given that so many traders were looking to enter $LVGO, we anticipated the trade would be easier to properly manage by buying ahead of the next obvious breakout level.

The chart below shows the 4-week price consolidation that formed after the initial breakout, as well as our buy trigger:

Healthy price consolidation checklist

Since the stock had just doubled in a month, we carefully analyzed the subsequent consolidation pattern to ensure our planned buy entry was solid. Here’s what we liked about it:

  • $LVGO rallied 100% from its last base in only six weeks!
  • Only corrected 25% off the highs as it chopped around for a month. That is a shallow correction after a powerful advance.
  • This consolidation was the first after the price set a new all-time high, so there is no overhead resistance.
  • Looking at the price action from left to right, we see the price swings tightening up leading up to our trigger over the two-day high.

Our patience to wait for a low-risk entry point paid off big time!

After a few weeks of chop, $LVGO exploded to a +20% gain on massive volume (on July 6).

The chart below shows the subsequent price action after our June 19 buy entry:

As of the July 9 close, we are still long $LVGO with an unrealized gain of +70% in our Wagner Daily model portfolio.

From here, we will continue to let the profits ride until the price action gives a valid reason to sell. As always, we will immediately alert subscribers when it hits our stop to lock in profits.

Although it can be tempting to chase a stock if you miss the breakout, this winning swing trade (once again) proves that patient traders continually get rewarded!

If you miss a breakout, simply wait for the next low-risk setup and buy—as long as the setup remains valid.

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