This post is mainly for my benefit and I hope that by writing it, it will reinforce a concept I'm trying to get through my head. One of the patterns that I've been tracking and makes sense to me is the afternoon HOD break, however I realized I've been making a key error when looking for these plays. Too often I've excepted any stock that is making new intraday highs after 2pm as an afternoon HOD break which isn't the case, at least not for me and what I'm looking for. 

When I say afternoon HOD break I'm picturing a very specific intraday chart in my head with specific criteria. For example, it's trading an inordinate amount of volume relative to the amount of volume it typically trades. It set a MHOD with a pullback that held above or around VWAP, showing that there's still demand up around the highs and that the initial move is justifiable in the eyes of everyone looking at it. But the most important concept is that it's making its SECOND leg up. The mistake I've been making is looking at stocks that are making maybe there third or fourth leg up and considering it a HOD break all the same as if it were the second leg up. This is a big mistake because with these low-price junk stocks, especially when trading them long, it's important to be in when the momentum is firmly on your side. I never want to play a guessing game as to where the chart is going to top out, though I can try and have an idea based on its history. What I can do, however, is determine when the move started and how extended the move is at its current price. 

Every additional leg up is just further away from the start of the move and by extension is closer to the eventual top where momentum will shift to the short side. Some stocks may have five legs up some may just have two but the best bet and most consistent way I can think to approach this setup is to only take entries on the second leg up. 

To be clear what I mean by a "leg up" is defined specifically as well. I don't mean just any pullback and push to higher highs because that's just normal price action and can happen dozens of times over the course of the day. The way I've chosen to justify a leg up is a push to new highs after a significant period of consolidation. I'd like to say I always stick to my rule of at least an hour of consolidation but it could be 45 minutes or so and I would still count it. What I'm really looking for is a pullback from the IHOD (ideally in the first hour of the day) that consolidates well on lower volume and then starts to perk up again for another push higher with volume building back in. 

I think I was initially hesitant to classify any stock meeting these criteria as a second leg up because often times this will occur midday and I hear all the time that midday trading should be avoided. I have, however, noticed a bit of a shift in trading activity which has been reaffirmed by some of the things Bohen and Sykes have been saying, that since the lockdowns began and trading has been so much more active the midday lull has gone away to some extent. Ideally, yes, I would still prefer an afternoon move but if the volume is present midday and the pattern is materializing then that's what I have to go off of because price action is king. 

I hope this helps this concept sink in for me a little more and maybe someone will read this who has been struggling with something similar and it'll click for them as well.