1.

The first pocket pivot is through the 50‐day moving average and comes after a
tight
sideways price consolidation on low volume. This occurred after a volatile,
trendless
year in the general market, so this pocket pivot is buyable. As a general rule,
bottomfishing
pocket pivots should generally be avoided in uptrending markets.
2. The second pocket pivot is off the 50‐day moving average. The X that follows is
extended
from this moving average.
3. The third pocket pivot is cautionary since part of its trading range could be
considered
extended above the prior buyable gap‐up day. The X that follows is extended
relative to the buyable gap‐up day.
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242890
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×100The first pocket pivot is off both the 10‐day and 200‐day moving averages. The
two
days after this pocket pivot could be considered buyable as the stock is breaking
out
of a sideways consolidation/base. The two Xs that follow are both extended from the
10‐day moving average and above the buyable gap‐up day.
2. The second pocket pivot is off the 50‐day moving average after a constructive
consolidation
into the 50‐day moving average. Note how the price action does not suddenly
run into the 50‐day moving average but has a subtle rounding‐out effect.
3. Part of the third pocket pivot is cautionary since it is extended relative to
the 50‐day
moving average because the stock bounced straight up from its 50‐day moving
average.
The two Xs that follow are under the 50‐day moving average.
4. The fourth pocket pivot is up through the 50‐day moving average after a
rounding‐out
pattern is formed under the 50‐day moving average. The X that follows is extended
from the 10‐day moving average.
5. The fifth pocket pivot is a base‐breakout, so while it is extended from the 10‐
day
moving average, it is not extended relative to the overall base.
6. The sixth pocket pivot is also a base‐breakout and off the 10‐day moving
average.
The first, third, and fourth Xs that follow are extended relative to the 10‐day
moving
average. The second X that follows comes after a relatively sharp drop in the
stock,
and so it should not be bought until it closes at or above its 10‐day moving
average.
7. The seventh pocket pivot is cautionary since it is somewhat extended from the
10‐day moving average and comes after relatively choppy price action, even though
it is rounded‐out price action.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.