“If the stock reenters its base, I have a rule to cut at least 50 percent of the position. Frequently, when a stock drops back into its base, it goes all the way back down to the lower end of the base”.

In other words, all who have bought inside the range are in profit and the stock is not under selling pressure. This is true in most of the cases, especially when the breakout occurs after a very long trading range (lasting several months or years) but the frequency of pullbacks after breakouts shows that actually there is a selling pressure after the breakout by all those who were “stuck” in the stock during the development of the range and finally find the opportunity to get out in a quite favorable price. Only when this selling pressure is dried up the price is capable of going higher.

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