The first X prior to the first pocket pivot is too soon in the pattern, since it is

just the
stock’s third day of trade since it went public. The second X occurs after a
downtrend
and closes under the 10‐day moving average. That this stock has only been trading
for a few weeks increases the risk in buying here. The first pocket pivot occurs
off
the 10‐day moving average, after the stock has had a chance to round out its basing
pattern, trading tight for three weeks. The next two Xs are extended from the 10‐
day
moving average.
2. The second pocket pivot is a buyable gap‐up, which is discussed in the next
chapter.
It occurs after a steep pullback, which is not unusual for a volatile IPO such as
this one.
3. The third pocket pivot occurs off the 50‐day moving average on the day it does
its
secondary offering. Notice in the days leading up to the third pocket pivot how the
stock got continuous support as it tested its 50‐day moving average. The next two
Xs
are extended from the 10‐day moving average. The window of opportunity to buy is
often just on the day of the pocket pivot.
4. The fourth pocket pivot retests, breaks to new highs intraday, then has a
reasonably
strong close. Such upside reversal patterns are particularly favorable. The X that
follows
is extended from the 10‐day moving average.