Under the popular “filter” system, a stock that has reached a low and has moved up, say 5 percent (or any other percent you wish to name), is said to be in an uptrend. A stock that has moved down 5 percent from a peak is in a downtrend. You’re supposed to buy any stock that has moved up 5 percent from its low and hold it until the price moves down 5 percent from a subsequent high, at which time you sell and even sell short. The short position is maintained until the price rises at least 5 percent from a subsequent low.
