Another important factor is the relationship between an uptrend and a stock's pivot point. Typically, stocks begin forming an uptrend after rising above their pivot point. In the event the upward trend is violated, the stock will generally be expected to continue falling until it can retest support. Initial support is often the 50 DMA, or its pivot point, whichever is higher.
Carters Inc. (CRI -$0.56 or -0.82% to $67.40) pulled back for the second consecutive day after its most recent challenge of the $70 barrier. This stock was featured on Monday, October 31st, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here) as it was emerging from a two month base. After its initial breakout, this issue failed to make significant headway and rolled back into its prior base. After spending three more months tracing out a longer base, on January 23rd, 2006, it gapped up and blasted out of a six-month base with big gains on massive volume. It generally found support near its 50-day moving average (DMA) line since then, as this issue has been quietly tracing out a new base-on-base pattern. A high volume move above $70.58 would be a technical breakout and trigger a fresh buy signal. Conversely, if this issue fails to make significant progress, near term support is first at its 50 DMA, then at its upward trend line. Losses below those levels should probably not be tolerated.