Canadian Stock Alerts - The Stock Pullback

0 views

Skip to first unread message

Chloe Fonda

unread,

Jan 17, 2010, 4:19:28 PM1/17/10

to Prelude to Meltdown

Just so we are both talking the same language let me define the stock
pullback from a Canadian stock alerts perspective. Of course it
happens in all countries where stocks are traded but I am focused on
Canadian stocks that pull back and I'd like to give you a few
examples.
I would like to reference four Canadian companies as recent examples:
On Tuesday June 9, 2009 a Canadian company called Serica Energy
(SQZ.V) started trading way above the previous day's close. A huge
spike up in share price on higher than normal daily trading volume,
and it just had to happen - the stock pullback. It spiked to $1.49 at
the open, and quickly pulled back to $1.33 which was still way up from
the previous close of $1.08
Waiting for the pullback forces us not to chase the stock and buy at
the high. As such we bought it at $1.33 and bailed out at $1.49 . Mind
you, it did go on to $1.60 but I was still happy with my 12% locked in
profit.
Also on Tuesday June 9, 2009 another Canadian company called Uranium
One Inc (UUU.TO) also opened trading above the previous day's close. A
nice spike up in share price on higher than normal daily trading
volume and there it was again - the stock pullback. It spiked to $2.44
before 10:00am and quickly pulled back to $2.40
The volume was incredible at 33 million shares traded or 4 times the
daily average, so yes UUU.TO was in play for sure. I bought this stock
at $2.44 and sold at $2.79 by 3:00pm (it did go on to $2.93) but here
again, I decided to lock in my 14% profit.
Remember we are trading without emotion, wait for the pullback, and
you are buying in logically, and then watch Level 2 for your best exit
point.
Another example involving a Canadian company happened on Friday June
5, 2009 Premium Exploration (PEM.V) opened trading above the previous
day's close. A nice spike up in share price on higher than normal
daily trading volume and there it was - the stock pullback. It spiked
to .18 before 10:30am and quickly pulled back to .16 . Generally, if
there is good volume, pullbacks are a very natural process and not
something to be feared.
This stock pull back could have been bought at .16 and sold at .19
(which is always a psychological price point threshold to avoid) which
in of itself doesn't sound like much, but it is still a 19% gain.
$5,000.00 invested would return $950.00 profit, even better if it were
inside your TFSA.
My final example of a Canadian company pullback happened on Thursday
June 4, 2009 Stem Cell Therapeutics Corp. (SSS.V) also opened trading
above the previous day's close. A small spike up in share price on
higher than normal daily trading volume and there it was - the stock
pullback. It spiked to .13 before 10:00am and quickly pulled back to .
12 . It ran to .155 and stalled, Level 2 showed there were lost of
sellers there, so I sold at .145 .
Now again, on the surface it seems like pennies, but .12 to .145 is
still a 21% gain. Using our $5,000.00 TFSA would have returned
$1,050.00 profit. A Canadian Stock Alert would have been sounded, not
to buy the stock but to pay attention to the extra volume and the
stock pullback in play.
In the last two examples, everything mentioned transpired in about two
hours. Now that's good work if you can get it!
The stock pullback can also occur more broadly when the entire market
is caught in a downdraft, and regardless of sector, everything pulls
back. These pullbacks are generally the safest, as these stocks were
pulled back with a broader market not as a result of any negative
news.
Stocks with higher than usual daily volume, and ones that offer you a
pullback are not foolproof, but they do offer two safety margins. They
offer liquidity, and guarantee that you'll wait and never chase a
stock.
We must all leave our emotions at the door and trade logically!