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Pocket Pivot Review - EXP, EDU 7-20-16

Construction materials maker EXP had a pocket pivot breakout. We reported on EXP briefly here: https://www.virtueofselfishinvesting.com/reports/view/market-lab-report-review-of-pocket-pivot-reports-edu-added-for-the-week-of-july-11-15-2016 as it was one of the stocks possibly pulling back on constructive volume within its base. 

EDU was in a low risk position to be bought on Friday as it had a pocket pivot on Friday off its 50-day line while still showing strong fundamentals. The sell stop could be placed just below its Friday intraday low. It then reported earnings today after which it gapped lower, opening at 40.07, or -4% lower from its closing price of 41.76 on Tuesday. Naturally, it would make sense to not ask questions and just sell at the open since such gaps lower can quickly become a lot worse. 

It instead did an about face and marched higher to close up 6.7%.

Risk control on gap downs is more important than trying to field all the profits, so selling at the open was the wise choise. That said, one could have rebought their position in EXP after having sold it at the open using the 6/20 moving average lines as a guide, but this is tricky as when the stock went to profit, it is tough to know it would not sink lower once again. But the 6/20 would have kept losses to a minimum.

Fortunately, most stocks don't behave this way as -4% gaps lower usually spell trouble ahead for the stock. So getting whipsawed is less likely. 

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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