The Pocket Pivot was originated by traders Gil Morales and Dr. Chris Kacher. A Pocket Pivot is a price and volume pattern that reveals an interest of institutional buyers. The indicator is best used when the stock is is a proper consolidation base and in a prior uptrend.
The indicator shows up when the following conditions are is true.
Current day's price has a close greater than the open. Current day's volume is greater than previous 10 trading days. Current day crosses up over the 10 day or 50 day SMA.
There are no changeable inputs other than color and shape. The script also does not check to see if the stock is in a proper base which allow the indicator to show up in other conditions.
I welcome your feedback and any enhancements you may suggest.
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I added the following features to the Pocket Pivot. 1. Ability to change SMA lengths from the standard 10 and 50 SMAs. 2. Ability to change the Pocket Pivot lookback length from the standard 10-day length. 3. Added Volume Pocket Pivot signature that shows high volume days that do not cross the 10 and 50 SMAs.
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Changed Upday criteria from needing have Close > Open AND current day's Close > previous day's Close to Close > Open OR current day's Close > previous day's Close.
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MACross variable was updated to count a real pocket pivot in the event of a gap up over the 10 or 50 SMA
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Added different price action criteria for the real Pocket Pivots and just Volume Pocket Pivots.
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Added the ability to change the volume length for both true pocket pivots (Blue up arrow indicator) and just volume pocket pivots (yellow down arrow indicator). Pocket pivots allow you to see signs of accumulation of a stock, which is especially important when a stock is basing.
Hi sir, what is different between true pocket pivots and just volume pocket pivots?
johann3s
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Hello JaRoRu, I am searching also for pocket pivots. Currently the volume counter is only counting the volume of the last 10 days. Even if it is a up day or a down day. In the book of Morales and Kacher only the volume of down days is considered. Do you see a opportunity to change it in your script?
johann3s
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@JaRoRu I just modified the code a bit for me. If I count for Updays also 1 to PPlen it seems to work. What do you think about this change? for i = 1 to PPlen if volume 0 > volume i or close i >open i and close i >close i+1
ChiragPatnaik
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@johann3s, I tried making this change. It didn't work for me.
Ambienz
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Hey JaRoRu, How do you find the Pocket Pivot strategy working and in what cases? I see in your chart it IDs long entry points that you would have gotten stopped out of if trading on this signal alone. Gil is a little too opaque, for eg why 10 and 50 and not 20sma? Why 50 and not 65e that I find works better with some names. I've tried experimenting with a volume multiplier filter - eg 120% of last 10days down volumes to try and get a cleaner signal. Have you also looked at the Strat in reverse?
edit - I just noticed you also did a non MACross version too (same). I find with the vol multiplier it helps with clues for Insto buying
JaRoRu
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@Ambienz, thanks for the comments. I ideally use the Pocket Pivot for character change (bearish to bullish) or signs of accumulation on the right side of a consolidation base. Gil and Kacher developed this after reviewing 1000s of charts to come up with the 10 and 50 SMA, but like any indicator, you can make it your own as long as you have back-tested it enough to give you the confidence to use it in your trading.
I am not familiar with the Strat. Could you send me a link to this strategy/indicator?
Ambienz
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@JaRoRu, Sorry my bad. I meant the Pocket Pivot (and for that matter BGU) strategies in reverse, as an insto distribution identification tools.
I wonder how well the 50d would work today. I find it too sloppy - the machines know about it and push stocks through only to reverse. I'm finding other indicators seem to be more predictive. I've heard Gil talk about 65ema.
fwiw the Strat is a day trading strategy based on inside and engulfing candles, but never really got into it as wrong time frames for me. Robin the Black I think is the guy who touts it.