FAQs Frequently Asked Questions

Each investor must decide what percentage above the pivot point is too extended to buy. Conservative types will set this percentage at lower levels, perhaps less than 3% from the pivot point.

 

Investors should also take into account the stock's volatility. Highly volatile stocks with high relative strength (RS) above 95 could have much upside potential so one may want to allow themselves to buy such a stock late even if it is a greater percentage above its pivot point than they normally would before they consider it too extended. Note, the point at which a stock is too extended should always be taken in context with the stock's overall volatility and upside potential.