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Blue-Chip Pullback Checklist ebook cover
Ebook

Blue-Chip Pullback Checklist

A practical, repeatable framework for evaluating 15%–30% pullbacks in high-quality stocks.

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What's inside

1. Define the universe
  • Mega-cap and large-cap names with durable earnings.
  • Profitable, positive free cash flow, manageable debt.
  • Liquid: avoid thinly traded tickers where slippage hurts.
2. Confirm the pullback is in a healthy trend
  • Price still above the 200-day moving average, or testing it for the first time.
  • Higher highs / higher lows on the weekly chart over 12 months.
  • Sector is not in a structural downtrend.
3. Quantify the discount
  • 15%–30% off the 52-week high is the sweet spot for blue chips.
  • Less than 10%: usually not enough margin of safety.
  • More than 35%: investigate why — earnings cut, guidance reset, regulatory.
4. Check momentum exhaustion (RSI)
  • Daily RSI under 35 suggests oversold conditions.
  • Weekly RSI under 45 confirms multi-week washout.
  • Look for positive divergence: price makes a lower low, RSI does not.
5. Look for technical support
  • Lower Bollinger Band touch with a reclaim candle.
  • 100-DMA or 200-DMA acting as price floor.
  • Prior horizontal support / consolidation zone.
6. Valuation sanity check
  • Forward P/E within 1 standard deviation of its 5-year average.
  • EV/EBITDA not in nosebleed territory vs sector.
  • FCF yield reasonable given growth profile.
7. Fundamentals still intact
  • Last earnings: revenue and EPS in line or better than guidance.
  • No structural margin deterioration.
  • Balance sheet: net cash or modest leverage.
8. Risk plan before entry
  • Position size 1%–3% of portfolio for a single name.
  • Predefined invalidation level (e.g. weekly close below 200-DMA).
  • Time horizon: this is a 6–18 month thesis, not a day trade.

Educational only. Not investment advice. This ebook is a research framework, not a recommendation to buy or sell any security. Always do your own due diligence.