All-Time High Stocks: Nobody said it would be easy (SXC)

Last week (here) I pointed out SXC (SXC Health Solutions) making a breakout from its Darvas box (the light blue box from 11-Aug to 26-Aug) at 80.10. This turned out to be a choppy trade, but nobody ever said buying breakouts would be easy. Sticking to some fairly simple buy and sell rules has made this trade work ok for me so far. Take a look at the second chart for more details.

This chart shows 10-minute candlesticks and the 40-period moving Volume Weighted Average Price (VWAP) during the first breakout and the next few days. On the morning of August 26 the stock breaks out to new all-time highs with a powerful move, then pulls back and gets support at the previous high (80.10) and then at the VWAP. These are good signs that buyers have control, so I take a position at $80.80. The next day I am stopped out at $80.10 for a loss of $0.70 per share and two commissions. Later that day (the 27th) the stock breaks above the key $80.10 level, but this time the VWAP is declining, so I pass. Later that day the stock drops below $79.00. On the 30th it comes charging back, breaks above 80.10 and the VWAP turns upward. I take a position at $81.05 with a stop at 80.45, leaving 0.60 at risk. (click for sharper image, hat tip to stockcharts.com)

On September 1st the price came very close to triggering my $80.45 stop, but bottomed at 80.56, sparing me another loss...for now.

Some of my thoughts on this trade, written as 'Ego' (one part of my mind) and 'AlterEgo' (another part of my mind):

Ego: This stock has had a good run already, why take a position on this move?
AlterEgo: But this type of thinking is exactly why stocks at 52-week and all-time highs outperform isn't it? Most people think it is already too high, so they under react to growth in earnings and other good news.
Ego: Is this stock one of the best opportunities out there? Should I have been focusing my attention elsewhere?
AlterEgo: There were, in retrospect, some better opportunities -- for example, AND.TO (Andean Resources Limited) -- but you can't always be right. Make sure your method is sound and your screens are finding the right stocks, then trade the plan.

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