Pocket pivots are a way to identify institutions’ footprints within a base or an uptrend.
Institutions buy within consolidation periods and during uptrends. This buying will leave behind a volume signature, and that volume signature is called a pocket pivot.
The institutions are the real movers of the market. We can’t move the market; only the institutions have the money to move the market.
So what does this mean?
We want to spot when they’re getting into things, and we want to follow along. The pocket pivot helps us identify when they’re getting in.
The definition of a Pocket Pivot is the day’s volume must be larger than any of the down volume days in the prior 10 days.
5 Pocket Pivot Rules
As with base breakouts, proper pocket pivots should emerge within or out of constructive basing patterns.
Do not use Pocket Pivots to bottom fish stocks. Stocks should be basing or in uptrends and be CANSLIM quality.
If the Pocket Pivot occurs in an uptrend AFTER the stock has broken out, it should act constructively around it’s 8-ema.
Do not buy Pocket Pivots if the overall chart formation is in a multi-month downtrend. For example: Trading below it’s 65ema/200dma.