You use the term 'pullback' in your reports. What does that mean?

  When a stock sells back after a run on lower volume, we refer to that as a pullback. Pullbacks are a natural and healthy part of a move up. Stocks cannot continue to move up without stepping back and taking a rest. It is important that it occur on lower volume-that shows orderly profit taking and not distribution. Averages act the same was as individual stocks, and that is why all the analysts are bent out of shape over the NASDAQ-its has been in a 45 degree climb since late October with very few pullback days.

Pullbacks are also called 'retracement.' Stocks tend to retrace or pullback the same percentage after each run. Some stocks retrace 25%-30%, some 50%. We prefer to use the moving averages as a gauge-the 10 and 18 day moving averages are very reliable when stocks are moving up in a good market.


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