Stock market indexes remain in an uptrend, as does gold, presenting lots of opportunities for swing trading stocks. Here’s the outlook and stock watchlist for high momentum stocks potentially near breakout points.
I continue to take long trades as quality setups occur.
The setups I am favoring right now are the cup and handle and continuation patterns. Continuation patterns are just handles that occur during a major advance once the price is past prior highs (top of the cup). See the Cup and Handle Strategy article for more on that pattern and what to look for in handles.
Why I am favoring these setups right now? The S&P 500 is fairly good proxy of what the average stock is doing. Or you could even look at other indexes, like the Russell 2000, or the Nasdaq 100.
What is the S&P 500 doing? It is moving back toward its pre-covid high. That means lots of stocks will be as well. As they progress toward that prior high, or above it, they will form handles. Thus, we see (and have seen over the last few months) an immense amount of cup and handles patterns.
I don’t care if the S&P 500 forms a handle, because I am not trading it. That said, it did create a couple of handles (not great ones) and nice consolidation breakouts from those handles. But the main takeaway is: if it is forming a cup, you can bet a lot of stocks will be forming cup and handles. If the indexes are moving in a trend channel, then you will likely see a lot of stocks moving in a trend channel, and could use a trend channel strategy.
Now, look at the Nasdaq 100. It has already blown through its pre-covid high. As the index was advancing, you can bet there were loads of stocks moving up and forming cup and handles. And there were. Now, as the index remains in an uptrend, continuation patterns/handles continue to form in many stocks.
The strongest stock names started forming such patterns well before the uptrend was even visible to most people. In 4 Signs of a Stock Market Bottom (video) I discussed a few tools that told us—with high a degree of accuracy—when to switch into buy mode when everyone was talking about the sky falling. Those signals are worth knowing; they will be useful next time there is a big selloff.
As for Gold, not much to say except “Strong like bull”. I continue to have positions in a few strong mining stocks, based on cup and handles/continuations. This is the gold miners ETF (GDX) and Gold futures.
Stock Swing Trading Watchlists
These are the raw lists. These have not been filtered for Reward:Risk, proper volume structure, upcoming earnings, and the handles may not be fully formed. These stocks are added to my list, and then I narrow it down to a few that set up correctly and actually break out. All the details to watch for are discussed in the cup and handle article above. Essentially, I am waiting for these to form the correct pattern.
These watchlists are generated with a scanner. Learn all about the scanning process in How to Scan.
I don’t include stocks that have already broken out unless they are still close to the entry point.
Stocks with a * beside them are getting to close having fully formed handles.
US Stocks to Watch
From ChartMill Sqeeze Play Ideas
SWKS* (broke today)
RVNC* Angled down, prefer to see price move up and then end consolidate.
Canadian Swing Trade Stocks to Watch
Recent Hits and Misses
My 35% and 4.24:1 reward:risk target on Orla Mining (OLA.TO) was just barely hit this week. That reward:risk was supposed to be 4:1. I didn’t have a target out, noticed the price in my exit area, so placed an order near the current offer and was filled for a bit of an extra gain.
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.