PPR - Lyondellbasell Industries (LYB) Pocket Pivot Buy Point and "Ants Breakout"

Published : November 6 2010 at 9:59 ET

Finally we have a chance to show you a stock flashing both a pocket pivot buy point and what we like to refer to as an "ants breakout." Chemical company Lyondelbasell Industries (LYB), shown below on a daily chart, flashed a pocket pivot buy point on Friday. You may notice on the chart, thanks to our annotation, that there are little black tick marks above the price bars near the top of the stock's recent rally in September and the first half of October. These little marks, which look like "ants" and so we have given them that nickname, indicate that the stock is up 12 out of 15 days in a row or better at that point. We use this rule to buy the ensuing breakouts we call "ants breakouts." In general, when a stock shows this kind of action where it is up 12 out of 15 days in a row or better and then backs up as it consoidates the immediately prior, very strong upside price move that produces the "ants" on the way up, we then look for a breakout to new highs as another add/buy point for the stock. Back in the old days, we would sometimes get very aggressive buying a stock on an "ants breakout," particularly if the general market is showing strength. In this case, we see LYB as buyable on both counts, using the 20-day moving average as a guide for a stop.

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