The stock market, as indicated by the S&P 500 and the NYSE Advance-Decline (AD) line, remains strong.

The NYSE AD pushed to new highs on June 8, while the S&P 500 remains below its high (February). This has historically been a very reliable indicator that the S&P 500 will also follow through to new highs over the next several months.

A quick note on some other indicators (from bottom to top on chart below):

• AD line at new highs (already discussed).
• Market is stabilizing with fewer and fewer 2%+ movement days. Big movement is more characteristic of a bear market, not a bull market. This is one-day Rate of Change (ROC).
• Upside volume divided by total volume on the NYSE is constantly hitting 0.8 (80%). That tends to be more common in early stages of a major advance. Then, as the trend progresses, there tends to be more days under 80%.
• 73% of NYSE stocks are above their 50-day moving average. That means lots of uptrends and still lots of opportunities for swing trading on the long side.

The following chart is of the S&P 500 E-mini futures contract.

Stocks That Are Setting Up for Potential Trades

The following stocks are setting up for potential cup and handle strategy breakouts to the upside.

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.

US Stocks to Watch

GNMK (breakout yesterday)
QDEL (breakout yesterday)
MGNX
PRPL
BILL
SGEN
TREX
SSSS
AU
FRHC
NYT
PZZA
RADA
MCFT
LGIH
AVAV
ACAD
EPAM
ASMB
DELL
ACN
GRMN

Candian Stocks to Watch

Lots of metal stocks. Careful over-exposure to one sector (unless you are ok with that).

TXP.TO
OLA.TO
TGZ.TO
BSR.V
NVO.V

Not cup and handles (anymore) but forming nice potential continuation consolidations. Traded the same way as a cup and handle.

EQX.TO
CG.TO

A Recent Hit and Miss

BLDP was on the watchlist recently and had a nice breakout to upside. My partner is learning to trade and taking many of these trades along with me. We used a simple 3:1 reward:risk on this one, so we picked up a 27% profit in 4 days. It kept going, but we have our money to plug into the next trade.

RNG is one I got into but it just hasn’t moved yet. I opted to get out for a small loss after a few false breakouts to the upside. It may still be good, and I may get back in later, but right now, I am the sidelines after taking a partial loss.

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.