In terms of the major indexes, the story is the same as last week.

The S&P 500 remains in an uptrend following the March 2020 bottom. The Nasdaq 100, Russell 2000, and the Dow Jones Industrial and Transportation indexes are also in uptrends since that point.

Overall, I continue to take valid long trades as the signals occur. Based on the list below, there is no shortage of opportunities. That means it is a quality time to be swing trading.

A reversal is always possible, which is why I use a stop loss on each trade.

The chart shows several metrics. Here is what those metrics are saying right now (from bottom to top).

• The NYSE Advance-Decline Line made a new high on July 14. This positive divergence follows the prior signal from early June. When the AD line makes a new high prior to the S&P 500 making a new high, the S&P 500 almost always follows suit in making new highs. That points to higher prices over the next couple of months.
• 1-Day Rate of Change shows no 2% or greater down-days recently. Big down days are a warning sign.
• Up Volume / Total Volume is not saying anything significant currently.
• 71.88% of NYSE stocks are above their own 50-day moving average. This indicates the majority of stocks are in short-term uptrends, which favors being long swing trades.

Gold Stocks

Gold stocks had already been hot. They composed most of the stocks on the Canadian watchlists recently.

That strength has continued. We saw breakouts the last few days in ELD.TO (EGO in US), K.TO (KGC in US), ORS.TO, SVM.TO (SVM in US), WDO.TO, WPM.TO (WPM in US).

The Canadian stock list below remains loaded with metal stocks.

Stocks Settings Up For Potential Swing Trades

The following stocks are setting up for potential cup and handle strategy breakouts to the upside. I don’t include stocks that have already broken out unless they are still close to the entry point.

This is the raw list. 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 article above. Essentially, I am waiting for these to form the correct pattern.

Going forward, I will highlight one or two trades each week (if available) that are getting close to triggering a trade. On July 13 I highlighted the trade setup in RH and on July 15 I highlighted Bitcoin which is still awaiting a trigger.

US Stocks Setting Up

ABB
ARCT
AVAV
BC
CGNX
HBIO
KKR
LAC
MEDP
MKSI
NEO
OTIC
SFM
SPTN
SYRS
YETI

Not a Cup and Handle, but another potential continuation pattern (consolidations, awaiting upside breakout). A lot of these were prior cup and handles but have run higher and are consolidating again.

APPS
BJ
HALO
HZO
LAD
NLS
PZZA
TNDM
TWST

Canadian Stocks Settings Up

ATY.V
CS.TO
CTS.V
GOLD.TO
KTN.V
LAC.TO
STC.V

Not a Cup and Handle, but another potential continuation pattern (consolidations, awaiting upside breakout). A lot of these were prior cup and handles but have run higher and are consolidating again.

CXB.TO
ELO.V
F.V
ITR.V
MOZ.TO
NXO.V
PYR.V
QRO.V
RIO.V
RVG.V
SII.TO
TUD.V
VGCX.TO
VSR.V

There aren’t a lot of Trend Channel trades right now, but there likely will be over the next few months. Check out How to Swing Trading Stocks with the Trend Channel Trading Strategy to start learning that strategy now for when those types of trades are plentiful.

Recent Hits and Misses

Trading is about winning and losing. In this section, I highlight a recent win and loss. Tracking the charts of your winners and losers may help you notice certain characteristics that your losers share, or that your winners share with each other.

No targets or stop losses hit since the last outlook on July 14. But, there are some stocks well on their way to the target, and some others that struggling a bit more.

Assembly Biosciences (ASMB) was a slow starter but took off today. I got into this one around $23.80 on the upside breakout from a tightening handle. The risk was just over 6%, the target is just about 25%, for a 4:1 reward:risk. Not a winner yet, but moving nicely at the moment.

Torex Gold (TXG) I am in this one but the handle is still likely forming. Although, with the surge in the metals sector, there is still potential for it to take off. While the handle was small, it did contain one of the lowest volume days on the chart right before the upside breakout. On the downside, volume didn’t increase on the break higher. But volume did move higher on July 20 when it broke out of a consolidation. This one remains on the fence (not showing great price action) and near the entry point. A little over 3:1 reward:risk on this one.

A critical element of successful swing trading is how much of each stock to buy. In How to Position Size When Swing Trading Stocks I lay out exactly how to determine that (it is not based on opinion or how convinced you are a trade will work out!).

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.