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Friday, March 29, 2024

THE 12 WORDS YOU NEED TO KNOW

David discusses his POH pattern to trade in an uptrending market. But he doesn’t seem to think the market has much further to go.

THE 12 WORDS YOU NEED TO KNOW

Courtesy of David Grandey
All About Trends
www.allabouttrends.net

Recently we’ve been talking about the only pattern you’ll ever need to know in uptrending markets — commonly refered to as a Pullback Off Highs (POH). And sure enough with the recent moonshot we’ve seen over the last 10 days, a bunch of names took off out of bases and low risk entry points like rockets.

All of those same names got away from those low risk entry points very fast, leaving any trades taken being more risky due to being away from those prime entry points. Just take a look at the charts of the market kingpin leaders: AAPL, GOOG, BIDU and GS.

Each of them, and many other stocks, are extended and away from a low risk entry point. Buying them now would be the dog chasing the bus type of trade.

The big question then becomes so where does that leave us if the majority of high quality names aren’t anywhere near prime buying entry points?

Well, that’s where the 12 Most Important Words You Need to Know Comes In —

"What Do I Need To See To Make Me Take A Trade"

What do I need to see to make me take a trade on the long side from here. By the way remember that statement, post it next to your monitor or make it into a poster, as IT WILL serve YOU well the rest of your life. It is your centering statement every day.

Below are a couple of examples of names that have recently shown us the "What Do I Need To See To Make Me Take A Trade" centering statement.  It’s what we want to look for from here. 
 

 

Both of these issues pulled back from recent highs as shown by the pink lines. They pulled back to chart support coinciding with the 50-day moving average. A break above the pink Pullback Off Highs line triggers a long side trade – and away they went.

In Summary:

So in the spirit of buy the dips and sell the rips, you now know what to look for.

As far as the indexes go by the way, if the indexes do go higher from here be aware it’s a climax run that sucks in all "the fear of missing it folks" after they already missed it which is the opposite of capitulation lows where nervous nellie caves in then after she caves into they run the pants out of the market. It’s also the beginning of the end of a market’s rally too.
 

 

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