Tuesday, September 7, 2010

Stock Market Video - Using Telechart to Find Pocket Pivot Buy Points

Hi traders.  I wanted to share an educational video on how to set up a "Pocket Pivot" scan in Telechart.   If you are reading the book "Trade Like an O'Neil Disciple" along with me, you'll know what I am talking about.  If not, you'll have to check out the book and video to understand the idea a bit more.   The basic idea is to buy stocks before they breakout by looking for stocks moving up on volume heavier than the largest downside volume day of the past ten sessions.   There are other factors however that go into buying a "pocket pivot" - one idea involves the position of the stock in relation to its 10 day moving average.   In a market where breakouts have been iffy at best for a while, I thought this technique was worth checking out.

As always, feel free to email me with questions or comments - I enjoy hearing from my readers.  I hope you find the video educational and helpful.   If you don't have Telechart, you can check it out for 30 days free.

To see the video in HD, please click "720p" and "Full Screen" on the video bar - HD will be available after processing.







Pocket Pivot Scan - C > C1 AND V > ABS(C1 < C2) * V1 AND V > ABS(C2 < C3) * V2 AND V > ABS(C3 < C4) * V3 AND V > ABS(C4 < C5) * V4 AND V > ABS(C5 < C6) * V5 AND V > ABS(C6 < C7) * V6 AND V > ABS(C7 < C8) * V7 AND V > ABS(C8 < C9) * V8 AND V > ABS(C9 < C10) * V9 AND V > ABS(C10 < C11) * V10

9 Day Moving Average Scan - C > (XAVGC9 * .98) AND C < (XAVGC9 * 1.02)

Volume Requirement - AVGV10 >= 10000   (Can be changed to suit individual needs - 10000 equals over 1 million shares, 5000 would equal 500,000 shares)

6 comments:

Anonymous said...

Hi Mac:

I was trying to create a scan for this, but so far unsucessful, will look at yours closer, if I have comments or ideas i will pass them along.
Note: i thnk your volume formula :AVGV10 >= 10000, is for 1,000,000 shares not 100,000.

Elio

Pradeep Bonde said...

You used good logic to build logic to build the scan. I think one of their condition is it should happen above 50 day MA. That considerably reduces number of stocks showing up in PCF.

Mac said...

Thanks Pradeep - I am still working my way through that section and taking notes. I will definitely be fine tuning it as I go, particularly on the volume. Good suggestion about the 50 day.

Elio - you're right about the volume - I will likely tinker with it as I said in the video but they do recommend stocks with higher liquidity in general.

Doctor Stock said...

Hey Mac:

Interesting post... I've been playing with stock screeners quite a bit lately, so I was interested to see this post. Thanks. Looking forward to hearing how it works out for you as you consider what it reveals.

Shawn said...

Hi Mac,

Thanks for all your good work here.

I have been following Gil Morales newsletter for a couple of years and been studying Pocket Pivots since Dr K started discussing them in the Gilmo Report about 18 months ago. I have had a few exchanges with Dr K about them a few months ago; and here is some feedback, the volume signature is precise and can be easily programmed, but the price action is a B/O as you say, but is less precise or scannable (IMHO) the authors talk about breaking through or bouncing off (or near) the 10 dma, but also use 20 dma, 50 dma, and 200 dma; and in the original statement, it was a short term declining tops B/O - I assumed Dr K was looking through all the stocks that made it through the scan (e.g. 303 in your video), but Dr K has told me that he scans for price action in addition to the volume signature (not sure what his scan would be to capture all of these). The technique is also used to buy pull backs in advancing stocks, e.g. they would use them for buy poins on VMW, FFIV, CRM, etc. which are currently in uptrends.

Sorry for the long note, but I wanted to clarify things b/c Pocket Pivots work much better than traditional o'Neil B/O's which really haven't worked well since about 2004 (as Dr K says in the book).

All my best,

Shawn

dve845 said...

Hello,

I just implemented a like kind definition of pocket pivots into our charts on tools.monest.net (advanced charts)
however currently only on the test platform
http://www.monest.net/test/aldwin/frontend/flex/
(i can at times not work because people are testeing/implementing nu stuff - it is our test server)

I saw that some PP’s are met while others still aren’t. Also PP’s are filtered that weren’t issued as such by the authors.
I asked them to look into this.
http://www.monest.net/phorum/read.php?9,543,552#msg-552
is the questions+answer I got from Gil and Dr. K.

A first question I have with your implementation is: shouldn’t it be better to offset the 10 sma criteria against the open or the close of the previous day instead of the close of the current one?

I'm currently experimenting with an extra condition stating de stock should close in the upper half of its daily range.

Kind regards