Refresher Course

  • November 1, 2001
  • Duke Heberlein

I received a few emails yesterday regarding where the trigger is in a
pullback, so I decided to give a refresher course in trading pullbacks. First,
we want to look for stocks in strong trends – up for long candidates and down
for shorts. This can be done using the

Stock Scanner to find stocks with high three-month relative strength
rankings, ADX readings above 30 and higher priced stocks that perform well on
pullbacks.

 

 

The usual trigger is the next high that occurs after the
pullback (or next low for a pullback from low short setup). In the above chart
of Genesis Microchip
(
GNSS |
Quote |
Chart |
News |
PowerRating) you have a 1-2-3 pullback that formed on
October 30.

 

 

Pullbacks are easy to spot, simple to manage and they work.
Every swing trader has them in his or her repertoire.

Until tomorrow,

Duke