These are the stocks I am watching for trade setups to develop in. I am watching for continuation patterns. Continuation patterns are the same formation as the handle in a cup and handle pattern, but without the cup.

The number of trades I am seeing is dwindling. Scanning for stocks that meet specific criteria acts as a natural safeguard because when there are lots of trade setups occurring the market is likely healthy. As fewer and fewer quality trade candidates emerge, it indicates fewer stocks are participating in the rally and that is usually when more losing more trades start to happen.

In Stock Market Outlook Still Positive, with Yellow Flags, I indicated that we don’t have any major warning signs for the market yet, but we do have some yellow flags. The indexes are still moving up, but the NYSE Avance-Decline Line and the Nasdaq Advance-Decline Line are not. While the indexes march higher, the majority of stocks no longer are.

That is not a sell signal. Yet, combined with the lack of stocks setting up for potential trades right now, it does mean that there will be fewer trades which means keeping more funds in cash.

I will continue to take valid trades if I see them, but the lack of them means I will be holding more cash than stock as time goes on. As trades hit their profit targets or stop losses and are closed, if those trades aren’t replaced by new ones we end up in cash. That is good. It keeps us out of trouble when conditions aren’t right.

Canadian Stocks Watchlist

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.

No orders placed in any of these stocks yet. They haven’t fully set up yet.

FM.TO
PRYM.V

From ChartMill Sqeeze Play Ideas

PGM.V
SOY.TO
SKE.TO
ORE.V

US Stocks Watchlist

No orders placed in any of these stocks yet. They haven’t fully set up yet.

CC (Technical Turnaround—like a cup and handle, but it occurs after a downtrend)
EVH (Technical Turnaround)
FVRR (big volume decline today. Needs to reset)
NVTA
URI

From ChartMill Sqeeze Play Ideas

STKL
IMMU
NGD
NIU
AEM

Sector Analysis

When swing trading, it can also be helpful to look at the sector charts every couple of weeks or so.

Which sectors are strong? That’s typically where the trades will be.

Which ones are weak and dropping? We typically, don’t want to own stocks in those sectors.

Are most of them strong? That means the market is healthy.

Are most of the sectors weak? That’s a warning swing for the market.

Based on the sector ETFs provided by Finviz, we can see a number of sectors are doing well, and then we have a few that are not doing as well. Charts are sorted by year-to-date performance.

Since the stocks that meet the scanner criteria and make it to the watchlist are strong, they will typically come from the top sectors.

When swing trading, make sure you’re buying the correct amount of stock for your account size, risk tolerance, and the risk of the trade. Find out how do it here.

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.