Here are the stock swing trading watchlists for Contraction Continuation Patterns for the US and Canadian markets as of Dec. 8, along with a swing trading market update on the health of the stock market. 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).
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 81% of NYSE stocks are above their 50-day moving average. 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 %. 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 at new highs. 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 and the price has broken higher out of a large range and is currently breaking out of a consolidation just above the range. Price action is bullish until proven otherwise.
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
The stocks below aren’t trade recommendations. These are stocks that are forming potential Continuation Patterns. Until they form a valid pattern, I don’t trade them. And even if they do form a valid pattern I can’t trade them all. The list can be further reduced by considering risk/reward ratios and profit potential based on the target price.
I don’t hold these types of swing trades though earnings.
If a stock only says “Contracting” next to it, it means it still needs to consolidate in the correct location and with the correct volume structure, or that a bit more contraction would be nice. If it says “Contracting. Consolidating”, then the pattern is closer to setting up properly and potentially triggering a trade.
If a stock says small “Small pattern” next to it, I am likely not trading it unless it was preceded by a very sharp advance. I am writing “small pattern” so I can track the performance of the small patterns over time to see how they perform. Small patterns have a higher failure rate, so I am tracking them to see if there are certain conditions where they perform better.
US Swing Trading Stock Watchlist
Here is the scan I ran. 297 results, manually filtered to those below. Plus a few names from last week.
SHOP – Contracting. Consolidating.
LAD – Contracting. Consolidating.
DSKE – Contracting. Consolidating.
PENN – Contracting. Looking for a consolidation anywhere around the 80 to 75 area.
FND – Contracting. Looking for a consolidation anywhere around the 88 to 85 area.
FRPT – Contracting well. Waiting for consolidation at top of contraction.
ZG (and Z) – Contracting. Awaiting consolidation near the top of the pattern.
NBEV – Contracting. Consolidating (pushing a big lower last few days)
APPS – Broke out. Still near the breakout area. Consolidating again.
APAM – Probably gone, unless it consolidates below $50.
AMRC – Broke out. Still in the breakout area.
CVNA – Contracting. Needs to consolidate again near the top of the pattern.
REGI – Contracting.
BPMC – Contracting.
TPTX – Contracting.
SSTK – Broke above a Small Pattern. Consolidating.
IIPR – Small pattern.
WOR – Small pattern.
MRTX – Small pattern.
AVTR – Small pattern.
KOD – Small pattern.
Careful: LL looks like a contraction, but is way bigger than anything we’ve seen in this run-up. That usually means more choppiness or a drop. The win rate on upside breakouts drops off on big patterns (compared to prior patterns in the uptrend). This doesn’t mean they never win, just less so than smaller patterns. Keep this in mind when scanning and filtering stocks. Lots of others out there like this.
Canadian Swing Trading Stock Watchlist
Here is the scan I ran. 117 results, manually filtered to those below.
We had a number of nice breakouts recently so the watchlist has shrunk.
CWX.TO – Contracting. Consolidating. Also a mini cup and handle pattern.
RUP.V – Contracting.
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.