Breaking News
LAST CHANCE for Cyber Monday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

How To Score Big Gains Buying Top Stocks On A Pullback To The 10-Week MA

By Deron WagnerStock MarketsOct 07, 2021 01:06AM ET
How To Score Big Gains Buying Top Stocks On A Pullback To The 10-Week MA
By Deron Wagner   |  Oct 07, 2021 01:06AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

When the market enters correction mode, leading stocks often provide low-risk buy entries as they pull back to key support of their 10-week moving averages. Here’s how to profit from applying this simple trading strategy to top stocks on a pullback now.

With both the NASDAQ and S&P 500 recently breaking below support of their year-long uptrends, most stocks in the market are now well off their highs.

Many under-performing stocks now have badly damaged chart patterns that will take a long time (if ever) to revert to a bullish trend again.

However, select leading growth stocks with relative strength are still holding above key support levels that could enable them to ascend to new market leadership when the bulls return.

One simple way to find the next potential big winners is to buy strong stocks that are now pulling back to their 10-week moving averages.

Why the 10-week MA matters so much

Most of the stocks we buy in The Wagner Daily model portfolio are breakouts from a solid base of consolidation. However, we also score big gains from buying pullbacks of explosive growth stocks pulling back into key support of their 10-week moving averages (10-week MA).

Mutual funds, hedge funds, and other institutions often buy hot stocks when they retrace to their 10-week MAs–a closely-watched indicator of intermediate-term trend. Following institutional money flow into leading stocks is always a great way to put the wind on your back.

What to look for when buying a pullback to the 10-week MA

Whenever a stock breaks out from a solid basing pattern and goes into trend mode, we then monitor for pullback entries using moving averages on the daily and weekly timeframes. As short to intermediate-term swing traders, most of our pullback entries into leading stocks are on pullbacks to the shorter-term 10 and 20-day moving averages. However, we also look for pullbacks to the 10-week MA on the weekly chart.

This type of pullback does not occur as frequently as a pullback to the 10 or 20-day MA, but it is a highly reliable buy signal that often offers a lower-risk entry point.

Below are a few examples of what to look for when buying a pullback to the 10-week SMA.

First, we look for a strong breakout from a valid basing pattern. The breakout (before the pullback) should be a move to new 52-week highs, and confirmed by increasing volume. Look for stocks that may have recently touched the 200-day moving average, or have come close to touching the 200-day MA during the base that preceded the breakout. This helps identify candidates that are not too extended and have room to run.

In stocks that are extended 20%-30% or more above the breakout level, look for pullbacks to the rising 10-week MAs that do not touch the 50-day MAs on the daily chart.

This occurs quite often.

Chart walk-throughs: putting it all together

Let’s walk through the charts of a few examples to show you exactly how it works.

Sprout Social

Recently, Sprout Social (NASDAQ:SPT) enjoyed a strong breakout on high volume from a lengthy base. As we look for, this was followed by a pullback to the rising 10-week MA. The breakout and subsequent pullback to the 10-week MA is shown on the weekly chart below:

SPT Weekly Chart
SPT Weekly Chart

When you first spot a stock that has retraced to its 10-week MA, it is a signal to begin looking for an entry on the daily chart timeframe.

We typically look for the confirmation of a short-term bottom by waiting for a bullish reversal candle (such as a hammer). Drilling down to the shorter-term daily chart below, notice how SPT stopped just shy of its 50-day MA and closed with a bullish reversal candle:

SPT Daily Chart
SPT Daily Chart

When you see this type of reversal bar on the daily chart, one possible swing entry is waiting for the price to move above the high of the reversal candle. Once triggered, the price should not come back down beneath the low of the reversal candle, which is an ideal level to place your protective stop.


The weekly chart of leading tech company NVIDIA (NASDAQ:NVDA) shows a strong breakout on volume from a lengthy base-on-base type pattern, followed by a pullback to the rising 10-week MA. Again, the first touch of the 10-week MA is a signal to begin looking for some sort of entry on the daily chart. The pullback to the 10-week MA is shown on the weekly chart of NVDA below:

NVDA Weekly Chart
NVDA Weekly Chart

Like STP, the pullback in NVDA stopped just shy of the 50-day moving average on the daily chart and formed a bullish reversal candle:

NVDA Daily Chart
NVDA Daily Chart

On this chart, a potential entry trigger could be a rally above the July 19 high, which triggered two days later. Again, a protective stop can be neatly placed beneath the low of the reversal candle.

4-step checklist for buying top stocks pulling back to their 10-week MAs

The pullback to the 10-week moving average is often a fantastic, low-risk entry to climb aboard a leading stock in a strong uptrend.

Here is a simple, 4-step summary checklist to help you find top stocks pulling back to their 10-week MAs:

  1. Stock breaks out from a valid basing pattern on higher volume and rallies to a new 52-week high.
  2. Stock pulls back to touch support of the 10-week MA and ideally just missed the 50-day MA.
  3. Wait for bullish reversal pattern on daily chart, then buy above high of the reversal bar.
  4. Set protective stop below the low of the reversal bar.

Of course, not all pullback entries will quickly rally back to new highs within a week or two–like SPT did. Some stocks, such as our NVDA example, may need a bit more time before moving out. Regardless, these pullback entries are pretty low-risk and tend to hold up well.

Original Post

How To Score Big Gains Buying Top Stocks On A Pullback To The 10-Week MA

Related Articles

How To Score Big Gains Buying Top Stocks On A Pullback To The 10-Week MA

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email