MLR - Q&A- Important points on pocket pivots

Published : February 27 2012 at 2:06 ET

Pocket Pivot Review

Q: On page 160 of your 18,000% Disciple book, it states that pocket pivot points that begin their move from a point that is above the 10-day moving average can in most cases be considered as "extend


A: Page 160 of our book says that pocket pivots that start above their 10dma can in most cases be considered extended. So if we take KORS as an example, on 1/31/12, KORS started right around its 10dma, so was not extended. Therefore, we notified all members on this day.

We also notified members on 1/17/12, since KORS started above its 10dma, BUT it was out of a short, constructive, sideways post-IPO consolidation, thus was a valid pocket pivot.

We did not notify members on 2/8/12 since KORS could be considered mildly extended since the low of the trading day was above its 10dma.

2/13/12 is a gray area since it traded sufficient volume but closed roughly midbar the day before earnings. As we have said in prior reports, one could add to or initiate their position on the day before earnings. However, should one choose to do so, make sure position size is conducive to one's risk tolerance levels, knowing that stocks can lost half or more of their value should they disappoint on earnings day. In the case of KORS, we notified members on 2/14/12 that KORS had a buyable gap up.

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