The Breaking Out screen: Zorro's one momentum filter, explained
Seven of Zorro's eight stock screens look for cheap, steady or undervalued. One looks for strength instead. Here are its four exact conditions.
Look down the list of one-click presets on Zorro's screener and a pattern jumps out before you read a single threshold: Deep value, Small-cap value, Quality compounder, Cash machine, Dividend growth, Fallen angel, GARP — seven of the eight are built to find a stock that's cheap, cash-generative, or growing at a reasonable price. Only one, Breaking out, asks the opposite question: not "is this undervalued" but "is this already moving, and is the business behind the move real." It's the screen least like the rest of the set, and its four conditions are worth reading in full rather than assuming it's just "stock near its high."
The four conditions, exactly as coded
The preset's test function checks all of the following at once against the live universe of roughly 3,400 US stocks:
| Condition | Threshold | What it filters for |
|---|---|---|
| 52-week range position | ≥ 85% | Trading near the top of its own one-year range, not just up in absolute terms |
| 26-week price return | ≥ 15% | A real, multi-month move, not a single good week |
| Revenue growth | ≥ 10% | An actual top-line reason for the strength |
| Operating margin | > 0 | A profitable core business, not a story stock burning cash |
| Market cap | ≥ $500M | Excludes micro-caps, where a 15% move can be a handful of trades |
No single line here does the whole job. A stock can clear 85% of its own range while still being down over the full year, if that range itself is narrow and depressed — which is exactly why the 26-week return floor sits alongside it rather than replacing it. Range position asks "where does it sit today relative to itself," and the return floor asks "did it get there through an actual multi-month advance." A stock has to answer yes to both.
Why range position, not a flat new-high rule
A simpler version of this screen would just check for new 52-week highs. Zorro's version uses range position instead — the stock's current price expressed as a percentage of the distance between its own 52-week low and high — because a flat new-high rule throws away information. A stock sitting at 90% of its range has room most new-high rules would reject outright, and 85% still requires the stock to be unambiguously in the top sliver of where it's traded over the past year, without demanding the single highest print. It's a looser bar than "at a new high" and a much tighter one than "up for the year," and the 15-point gap between a bare pass at 85% and the maximum at 100% is where that distinction actually lives.
The growth and margin floor that keeps this from being pure momentum
Range position and 26-week return are both price-only measures — nothing in either one looks at the company behind the ticker. That's where the other two conditions do their work. Requiring revenue growth of at least 10% means the move has to coincide with the business actually expanding, not merely with sentiment or a short squeeze. Requiring a positive operating margin — a low bar, not a high one — excludes the subset of momentum names that are moving on narrative while still losing money at the operating line. Together they turn "the stock is going up" into "the stock is going up while the business is growing and the core operation is profitable," which is a narrower and more checkable claim.
The $500M market-cap floor serves a different purpose: at very small market caps, a 15% six-month return can be the product of thin trading and a handful of large orders rather than sustained demand for the stock. The floor doesn't eliminate noise entirely, but it moves the screen into the range where a 15% move reflects a less fragile base of actual trading activity.
The mirror image: Breaking Out against Fallen Angel
The cleanest way to see what Breaking Out actually tests is to hold it up against the fallen angel preset, which sits at the opposite end of the same range-position measure: range position below 25% and at least 30% off the 52-week high, versus Breaking Out's 85%-plus. Structurally, the two presets are built from the same measurement — where a stock sits in its own 52-week range — pointed in opposite directions. Both also pair that price condition with a business check rather than trusting the price alone: Fallen angel requires positive trailing earnings and revenue growth at or above zero; Breaking Out requires a higher revenue-growth bar (10%, not merely non-negative) paired with a profitability check at the operating line instead of the net-income line. Neither preset will ever match the same stock in the same quarter, by construction, since a stock cannot simultaneously sit in the bottom quartile of its range and the top 15%.
What the screen doesn't claim
None of this says anything about what the stock does next. Momentum that has held for 26 weeks is not a guarantee it holds for another 26, and nothing in Zorro Trade's screens forecasts price — that's true of Breaking Out exactly as it's true of the other seven presets. What the four conditions establish is narrower and fully checkable: the stock is trading near the top of its own one-year range, got there through a real multi-month advance rather than a single spike, and the business underneath that move is both growing and operationally profitable. Recently listed companies are a useful place to watch this distinction in practice — the recent IPOs page tracks first-day pops and early rallies that often fail the growth and margin legs of this screen even when the price action alone would pass, since many newly public companies haven't posted the trailing revenue or operating history the screen checks for yet. That gap between "the chart looks like Breaking Out" and "the stock actually clears all four conditions" is precisely the one the preset is built to catch.