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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (40309)	11/2/2003 11:39:21 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 70990

Volume Separates Normal Pivot Pullbacks From Failures Investor's Business Daily Wednesday October 29, 10:49 am ET By Jonah Keri If investing were easy, every stock would rocket up on a rush of powerful volume, never looking back. It's often not that effortless. Even the best-looking breakouts may reverse course and drift back down to their pivot points. Smart investors don't panic. Instead, they ride out early jitters and hold for big gains. How common are pullbacks to a stock's pivot point - its buy point? No less than four of every 10 big winners trace that path. Some even fall slightly below the pivot, usually on an intraday basis. So how do you separate future big winners merely taking a breath before running up to huge gains from plain old failed breakouts? As with any stock, use volume cues to guide your decisions. As discussed many times in recent Investor's Corners, volume should be heavy the day of the breakout. Ideally you're looking for volume 50% or more above average, with a triple-digit volume increase preferable for more thinly traded stocks. In gauging pullbacks, look for volume to be lighter than during the breakout. That type of action shows more conviction among buyers than sellers, a sign of strength. Even if volume comes in light, remember your key trading rules. You can let a stock dip slightly below the pivot if volume stays light. But if the stock keeps falling all the way to 7% below your buy point, you must sell immediately. No excuses. Mobile TeleSystems went public at 22 in June 2000, just as telecom stocks were beginning their horrific slide. The stock held its ground compared with the swooning market, treading water for more than a year as it traded in a fairly tight range. Meanwhile, the Russian mobile phone service provider began hitting a sweet spot in its business, quickly growing its subscriber base. The stock flirted with 40 in late 2001 and early 2002, then fell into a base. It shot past the high of its base, looking like a cup without handle as it hit a new high (point 1 ). It then formed a high handle or a new 12-week base, depending on your view. Either way, the pivot was at the top of that formation. Mobile broke out over two weeks as volume rolled in (point 2 ). The stock then drifted below its pivot over the next four weeks. Note how volume stayed light during that time, assuaging investors' fear (point 3 ). Mobile bounced off its 50-day moving average, then went on to big gains. It's nearly doubled in the 6 1/2 months since then.