Traditional base breakouts are sometimes failure-prone as many people have been trained to see the same recognizable chart patterns. When a trade is crowded, the stock may become volatile and shake you out.

Anyone can recognize a standard base breakout, but can you identify early accumulation within a base?

A pocket pivot is a clear identifiable volume characteristic that confirms institutional accumulation on a stock chart.

What Is A Pocket Pivot?

The definition of a pocket pivot is the current up day’s volume must be larger than any of the down volume days in the prior 10 days.

Pocket pivots are a way to identify institutions’ footprints.

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 big institutions have the money to move the market.

We want to spot when they’re getting into positions and accumulating, and we want to follow along.

Pocket Pivot Examples

This SMCI chart utilizes Deepvue’s Enhanced Volume to help quickly recognize when a pocket pivot develops. Green volume bars are pocket pivots.

SMCI needed over 20 weeks to digest a previous 250% move. In the middle of December 2023, we see a cluster of pocket pivots when price made a higher low.

These pocket pivots within the base are subtle and don’t stand out like breakout volume.

GTLB gapped up on its highest volume ever, then went sideways for over 20 weeks. As price consolidated and tested the gap lows, we saw supportive action with subtle pocket pivots.

While a pocket pivot is a bullish signal, it is not necessarily an indication to buy the stock. Instead, it is a sign that the stock may be ready to make a move higher and that you should keep an eye on it.

Pocket Pivot Tips

• Proper pocket pivots should emerge within or out of constructive basing patterns.
  
• The stock’s fundamentals should be strong.
  
• Do not use pocket pivots to bottom fish stocks. Stocks should be basing or in uptrends.
  
• If the pocket pivot occurs in an uptrend AFTER the stock has broken out, it should act constructively around its 8ema.
  
• Pocket pivot candles should close in the upper 50% of their daily range.
  
• An extra sign of strength is when pocket pivots appear in clusters of 3 or more.

Putting it all together

Pocket pivot is a valuable tool to identify signs of institutional accumulation.

Remember you are looking for up day volume to be higher than any of the down days in the last 10 days.

Pocket pivots are a positive sign, but they don’t always mean you should buy right away. Instead, use them as a signal to watch the stock closely for signs of increasing momentum.

They can be used to identify earlier entries or add conviction to a stock that is breaking out knowing there are institutions behind it.