Market Heads Down, Time For Us To Profit

Over the last 2 trading days, the market have made us remember that we are actually still in troubled times. It is a simple reminder of why you should always take profit when you can; however, the market going lower is actually a move many of been waiting to come for awhile.

It is no secret that there are various ways to play the market. Some like to try and play the guessing games with breakouts, while others enjoy what is called a “pullback.”

In most cases a breakout is noted when a stock moves passed some sort of resistance or support. It essentially lets us know that the stock looks to have moved into another trading level. On the other hand we have the pullback…

The pullback is basically playing the stock on the move usually after a breakout. Very rarely to stocks move in one straight direction. Usually it might go up, then come back down a little, and then head up again. The classic chart pattern you see so often everywhere.

By playing the pullback we are able to play stocks “post-breakout.” For various reasons, you might have missed the initial move in a particular stock. By playing the pullback, we are given the opportunity to get back in.

The most optimal method to playing pullbacks are to simply track the stock’s volume. For breakouts, volume is usually some number times larger than normal volume. For the right pullback you will want to see the stock’s volume much much lower than volume on the breakout.

Pullback Examples

Example 1: On the initial breakout volume was strong. On the following pullback, you can see volume was low, and stock soon after header back up again.

Example 2: Once again there was strong volume on the breakout, followed by a low volume pullback and then a move higher.