First, thank you for everything you share. It is really a blessing for me to read and hear all you have to share and teach.
I wanted to ask about buying on pullbacks. I understand that the technique is to buy when the stock has found support at the moving average, and is bouncing off or back through the moving average, 10 or 21 or 50 day… however, would you be able to kindly share your technique? Do you look at the 5 min chart to detect the support and bounce? Or how do you actually determine that the support has taken place and it’s now moving back off the moving average in high volume? And how can you track several stocks at once if there is, like now, a general market pull-back. I find that by the time I know the bounce has occurred, the stock is already too far off the moving average, so I keep missing the bounces for the most part. It doesn’t help that I can’t be watching the screen all day… Your advice on how to best improve on this will be helpful!
Thank you in advance Marty!
Thank you for your kind words!
Buying stocks after a pullback is an art.
First of all, if we narrow our focus and limit the number of stocks we watch it makes it easier to identify a stock pulling back. We only want to be looking at stronger stocks to buy on pullbacks. There are many different types of pullbacks, and I will review my two favorites.
The pullback to a 50sma AFTER BREAKING OUT OF A PROPER BASE has a higher success rate than most. Remember, these are stock s and we are dealing with probability and nothing works 100% all of the time. There are two stocks on the ready list this morning that broke out of a proper base, and have now pulled back to a moving average. I will use WING as an example as it broke out of a base recently and has returned to its 50sma. If you do not want to risk any capital just watch and observe the action in this stock. I do not buy until I see some kind of a bounce as buyers must come in and support the stock.The second type of pullback I like is after a move higher a stock takes a breather and pulls back to a moving average (usually the 21ema) in lighter volume preferably. I include a short video to provide a few examples.
I hope this answers your questions.
P.S. I use daily and weekly charts for pullbacks. The only Tim eI use 5 minute charts is when I am day trading, and I do not do that much any more.
Thank you so very much for your detailed response. This is VERY helpful! So, if I understood correctly, you wait until you know the closing range of the bounce, to buy the pullback, so do you buy the stock the next day? Or do you buy in the last 30 minutes of the day when the bounce is occurring - and presumably have a better idea of closing range? Or none of the above? Thank you again, very kindly, for all your great advice and support! Alex