Here is my market outlook and stocks to watch through this holiday season.
Merry Christmas everyone, or whatever holiday you celebrate…or don’t celebrate.
It’s been a weird year, but I’m hoping one of the positives is that you got to learn or develop your trading skills further.
Quick Market Update for Swing Trading
The stock market is still in good shape according to the market health indicators. Therefore, I am taking valid long trades as I see them.
Charts are provided by TradingView.
You’ll notice that the outlook hasn’t changed much over the last few weeks. While most analysis online is based on opinion, and changes by the day and the mood of the writer, when analysis is systematic it becomes much easier to remain objective and just focus on the data.
Here are the data points that matter currently, signaling the market is still healthy (not a forecast…just what is happening right now).
- Nearly 78.06% of NYSE stocks are above their 50-day moving average (top indicator). That means lots of stocks in uptrends—favorable for swing trading on the long side.
- The blue bars show the daily rate of change in % (second from bottom). Price declines contain large single-day drops. Up periods are typically marked by much smaller daily movements, especially to the downside. We haven’t had any large drops of 2% or more (single day) since late October. When that indicator is quiet, it is good.
- The NYSE Advance-Decline Line is near highs (bottom indicator). This shows wide participation in the number of stocks advancing.
- All the major indexes are performing well currently (not selective). This is good.
- From a price action perspective, we are in an uptrend over the longer-term and shorter-term, with the price moving sideways in most indexes over the last couple of weeks.
These are not predictions or forecasts. I simply use these indicators to determine what conditions are right now, so I can determine how much of my capital I wish to deploy while swing trading. Right now, I am taking trades as they come.
Swing Trading Stock Watchlist
Here are the stock swing trading watchlists for Contraction Continuation Patterns for the US and Canadian markets as of Dec. 23. Some of these stocks are forming imminent trading opportunities, while others could develop over the next week.
Since the market is in an uptrend and pushing to new highs, the Contraction pattern is the main pattern in play currently (relative to other patterns I trade).
US Swing Trading Watchlist
IGNORE VOLUME SPIKES DEC. 18 (IF APPLICABLE). THOSE WERE MOST LIKELY DUE TO QUADRUPLE WITCHING.
There are a lot of stocks on the scanner list. This shows robust participation in this rally. Went through 320 stocks.
AVLR – broke out yesterday (from Dec. 16 list). I have a position.
BLD – Contracting. Consolidating.
VCEL – Contracting. Consolidating (broke out already, but still close to entry)
FRPT- Contracting. Was waiting for this contraction to develop a little longer. Have that now. Two-day consolidation and broke out yesterday. No position.
APAM – Contracting. Consolidating. Pattern is more spread out due to higher highs.
SPT – Contracting. Consolidating.
TVTX – Contracting. Consolidating. Pattern is more spread out due to higher highs.
APAM – Contracting. Consolidating.
CCS – Contracting. Consolidating.
TGH – Contracting. A bit small, but longer than a month.
BALY – Contracting. A bit small, but longer than a month. (broke out right after publication, may consolidate again)
DOCU – Contracting. Consolidating.
GNRC – Contracting.
FLGT – Contracting.
QTRX – Contracting.
SRRK – Contracting.
THESE WERE ON MY LIST BUT I HAVE REMOVED THEM ON CLOSER INSPECTION:
GPRO (too big of a pattern, letting it settle down)
Canadian Swing Trading Stock Watchlist
Went through 97 stocks.
DEF.V – Contracting. Consolidating.
CGG.TO – Contracting. Consolidating.
HIRE.V – Contracting. Consolidating. (careful, low volume, big moves)
EXRO.V – Contracting. Smaller, but at least a month long.
EFL.TO – Needs to contract a bit longer.
ML.V – Contracting. Smaller, but at least a month long.
I am working hard on a new Stock Swing Trading Course. I am aiming to have it available for late January 2021. Sign up for my free weekend trading tips newsletter, and receive a notice and special discounts when it launches.
Cory Mitchell, CMT
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.