This morning I built a pocket pivot screener in Marketsmith.
It provides a list of names who are flashing a very powerful signal of institutional accumulation while still within a base.
Below is the screen and a thread explaining what a pocket pivot is, with examples.
(1/12)
It provides a list of names who are flashing a very powerful signal of institutional accumulation while still within a base.
Below is the screen and a thread explaining what a pocket pivot is, with examples.
(1/12)
Before I begin, I should note that the results above are from yesterday.
I will update with today's results later in the session.
I will update with today's results later in the session.
So to begin, a pocket pivot is a simple way to spot days where the heavy hitters appear to be building large positions in a stock, prior to an all-time high breakout.
As we know, institutional capital is what drives massive price movements so we need to follow the money.
As we know, institutional capital is what drives massive price movements so we need to follow the money.
Therefore, the first thing we need is highly liquid, institutional quality stocks.
Funds that are moving millions or billions into a stock can’t do it if there's no liquidity. They might be able to buy and the price would soar but they’d be stuck when they try to sell.
Funds that are moving millions or billions into a stock can’t do it if there's no liquidity. They might be able to buy and the price would soar but they’d be stuck when they try to sell.
In my screen I found these liquid equities with a few different parameters:
1. No ETFs
2. No SPACs
3. Stock price > $10
4. Average Daily $ Volume > $20M
1. No ETFs
2. No SPACs
3. Stock price > $10
4. Average Daily $ Volume > $20M
So now that we’ve narrowed down the possibilities to the highest quality stocks, what is a pocket pivot?
A pocket pivot is a day inside of a constructive base where price is up with volume greater than any down day in the last 10 days.
Fairly simple.
A pocket pivot is a day inside of a constructive base where price is up with volume greater than any down day in the last 10 days.
Fairly simple.
The parameters that filter out the noise and provide us with potential pocket pivot names are:
1. Daily Price % Change > 0 (AKA the stock is up on the day)
2. Price < 0% off all-time highs (AKA the stock is within a base)
3. Current day’s volume greater than previous 10 days
1. Daily Price % Change > 0 (AKA the stock is up on the day)
2. Price < 0% off all-time highs (AKA the stock is within a base)
3. Current day’s volume greater than previous 10 days
That volume parameter above isn't perfect, Marketsmith has no way of displaying if the current day's volume is greater than just previous down days.
But finding volume greater than any of the previous 10 days will give us even stronger names, so not complaining.
But finding volume greater than any of the previous 10 days will give us even stronger names, so not complaining.
But the biggest key to the pocket pivot signal is the fact that the stock must be within a CONSTRUCTIVE base.
That means a pocket pivot can’t occur on the way down the left side of a base, on the bottoming day or if the stock is just overall in a multi-month downtrend.
That means a pocket pivot can’t occur on the way down the left side of a base, on the bottoming day or if the stock is just overall in a multi-month downtrend.
Some of the work to see a constructive base has to be done with your eyes. But there are a few parameters that can weed out the names that aren’t quite ready to qualify for a pocket pivot.
1. Price > 50-Day Simple Moving Average
2. Price > 200-Day Simple Moving Average
1. Price > 50-Day Simple Moving Average
2. Price > 200-Day Simple Moving Average
So now after these 9 parameters are run, we’re left with the highest quality equities who are flashing signs of institutional accumulation while still within a base.
This allows us to find early entries for stocks that look to be gearing up for a run through all-time highs.
This allows us to find early entries for stocks that look to be gearing up for a run through all-time highs.
Here are a couple more recent examples of pocket pivot buy signals prior to massive runs.
$NET gave 8 pocket pivot signals prior to a 131% run in 2021
$SI gave 3 pocket pivot signals prior to a 1008% run from 2020-2021
$NET gave 8 pocket pivot signals prior to a 131% run in 2021
$SI gave 3 pocket pivot signals prior to a 1008% run from 2020-2021
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