Frequently Asked Questions

Pocket Pivot Review / Buyable Gap Ups
How did you backtest the pocket pivot trading strategy?

I backtested the pocket pivot trading strategy going back to the 1920s. I look at price/volume action of stocks with robust fundamentals (CANSLIM characteristics, ie, leader in its space, robust earnings/sales, pretax margins, ROE, etc). I also look at stocks with less than stellar fundamentals for comparison. Stocks with leading fundamental characteristics as proven out by our exhaustive Model Book studies going back 20+ market cycles showed a higher success rate when buying at constructive pocket pivot buy points.

On the technical side, having examined millions of charts over the last 20+ years, I naturally am looking for constructive price/volume formations for a pocket pivot to qualify as a buy point. The method not only worked in the sideways choppy markets of 2004-2006 but also in the 1990s and in entirely different eras such as the roaring 20s, nearly one hundred years ago. In fact, my returns in the 1990s would have been that much greater had I made discovery of the pocket pivot when I started trading successfully in 1991. But it was the sideways choppy markets of 2004 which led to my discovery of the pocket pivot in 2005.

Published: Jun 21 2011