Stocks that are in a pullback have a variety of terms applied to the price action, like “Knife Catch”. No matter how you define it, the process has one common goal: to find a bottom for price to find a new long entry.

In order to find a bottom, you must have a variety of elements within the stock chart that help increase the probability that the bottoming process is in its final stages – I refer to this as the “stakes in the ground” process.

For a current example of a stock that is in this process, I bring you the Daily chart of $WPRT (Westport Innovations):

In reviewing the chart above, you can see several things of importance:

• The pullback from 50 has been significant in a short amount of time (with volume confirming)
• 50 day moving average way above and rolling over
• RSI is bottoming near the oversold level of 30
• The Stochastics are also trying to bottom
• Price is sitting on top of the 200 day moving average
• Price hovers just above a key Horizontal Support line