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We never know for sure, but generally this is what a gift looks like. Four day weighting of accumulation to distribution is heavily in favor of accumulation and today is a low volume drop back into the 5% box. We don't get a lot of these, as they often skip away higher without a chance for entry.
I have been watching this stock ... even before your post Abe ... as is the case sometimes the "pivot" and "loss" zones differ from the weekly to the daily charts ... having less confidence in this FTD rally PLUS it being July, I set a tighter stop on my small position "probe" and got out - - with the market under pressure (M in CANSLIM) PLUS CSTR's RS Rating now, today as it is ... would be curious to hear your discussion now 3 days later from this original post. It appears to me that the WEEKLY chart looks less promising than the DAILY - - though the DAILY recaptured and closed above the 21 dma. Next week is options expiration week too. Comments? Thx
I closed the position. However CSTR remains in my top nine stocks and I do expect this CWH to give us a 25% run up in the next 8 weeks. I'll wait for a pocket pivot to show up.
Earnings in a couple of weeks plus the cooperation of the market. Patience.
Abe, when you are buying pocket pivots, are you looking for continuation pocket pivots once the stock has broken out of its base or pocket pivtos within a base, or both? I know in your rules you have used you look for a substantial upward thrust on volume followed by a consolidtion around 20% from the high or better, so do you want to see that once it has cleared the base or while it is in it or both?
According to HTMMIS the prior run up should be at least 30%. Sometimes I am comfortable if the prior run up was 25% in less than three weeks with high volume. Generally, I like bases to be less than 20% deep.
However, parabolic moves up the right side of a base of 20% or more in less than three weeks gets me very interested in bases that are deeper than 20%.
Most of us are trying to buy the Apples in the market and hold for a 600% move, but really this as the wrong approach. You want to capture the bursts in Apple within its grand move. O'Neil describes taking most of your gains at 20-25%. That way you are protected from the inevitable major downtrend and you can buy NSM in June while AAPL is consolidating.
I like the pocket pivots best coming out of a proper base or from the rising 50 dma or 20 dma within six or seven weeks from the last multi-week consolidation.
If you are very strict with the three day sell rule, perhaps you can add a small position at the rising 10 dma within four weeks after a multi-week consolidation.
I only trust them for three days, then accumulation had better be showing up and getting higher.
Great stuff Abe. I noticed you use the 20 dma more than the 10 dma which Dr. K uses more for contiuation pocket pivots. Have you found through your going through hundreds of charts that the 20 dma is more effective? Also, with Chart Arcade do you start with weekly charts to find bases then drill down once you see a breakout of a base for the pocket pivot? I seem to be losing the forest for the trees sometimes in chart arcade and wondered how you went about drilling down to the buy points.
I try to play every chart in ChartArcade. There usually is some tradeable rally in every stock over a two year period. With my small account, I do most of my reading on the daily chart. That way I can quickly spot on balance accumulation on the four day count. That's just what my eye is trained for. Of course I check the weekly chart, but my weakness is that sometimes the weekly chart is more of an afterthought. I regard any penalty I absorb for late weekly chart reading is far more than offset by avoiding losses like today's trade in CSTR. I'm not exactly sure how you avoid today's CSTR loss or the CERN 6/20 loss from the weekly chart.
The 10 dma really seems more like an add on point rather than a place to initiate. WNR gave us a great PP at the 10 day yesterday that really worked out today. Note that WNR is just at 4 weeks from its 6/15 launch. Too extended here for me to buy, but yesterday would have been a textbook Kacher PP. Note that WNR on 6/22 was up 20% in less than three weeks from 17.84 low. Someone was snatching up shares.
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