The stock market indexes are moving well and we have also had some great movement in stocks from the prior watchlist.

I will continue to take long trades as long as the market health indicators are healthy and trades are continuing to work well overall.

I am focusing on trading contraction breakouts. Some of these contraction breakouts are occurring from larger cup and handle patterns due to the recent price decline and then rally back toward the highs in the many stocks. I am using these strategies to trade the stocks below.

Here’s an example of what I am looking for. This stock was on the prior watchlist and had a very nice consolidation breakout from a contracting pattern. Unfortunately, this one is coming up to earnings soon, so I’ll likely be closing it early. But still a nice move; anything near $31 or above is a 3:1 or greater reward to risk.

AQUA is another example. So is SIG (false breakout down first, then back up through consolidation). GNRC was working, but get out before earnings. TDC didn’t work and earnings are upcoming. EVC trying to work; earnings soon.

Also, check the news before placing actual trades. I had two on the list last week that were in buyout proceedings: HMHC and NOT.V. If the range looks really tight, scan through the news and look for buyout talks. The trade likely won’t make much if that is happening since the stock is already trading near the buyout price. Save the cash for something else. Stocks in buyouts do make it onto the watchlist sometimes. The watchlist is my initial visual scan of what is interesting. Before taking a trade do all your checks.

Stock Swing Trade Watchlist for Week of Oct. 25 (and possibly beyond)

This is NOT a buy list. It is simply a list of stocks that are forming contraction patterns. I then watch these stocks to see if they form valid entries. Also, since I can’t trade all the stocks on the list (if they were to all trigger), I pick the ones I like best from the list and place orders in those.

There are lots of companies reporting earnings in the next month! Be aware of the earnings date for any trades taken.

US Swing Trading Stocks Watchlist

128 stock met the scan criteria on the right. There were 129 last week.

DVN
DVAX – way bigger pattern than I like, but earnings very soon. If it can break out on a good earnings announcement I may consider it.
AR
VRAY – same story as DVAX
CDEV
SE
GSL – earnings soon
GOGO – tight. Earnings soon.

From last week:
EVRI – tight pattern in Oct within multi-month consolidation.
NTAP
ISEE – earnings soon
CELH – has to move back up quickly
TDC – earnings soon

Canadian Swing Trading Stocks Watchlist

93 stocks met the scan criteria on the right. 97 last week.

POU.TO – recent breakout
GGD.TO – breakout Oct. 25, still in the entry area.
NXR.UN.TO
BIR.TO
OPS.TO – channeling up
PUMA.V – still has to move back up and consolidate.
AZZ.TO – same as above.
EU.V – same as above.
CSO.V

From last week’s list:
UNS.TO – more a range than a contraction, but nice recent consolidation. Conservative target.
TMC.V – weird, but very tight.
TOU.TO – earnings soon.
ECN.TO – Pattern occurs below weird earnings spike then drop back August. Grindy movement.
HME.V
CUR.V – Broke out mid-October, popped, but now back near entry.
CYP.V – Beautiful breakout a couple of days ago.

BY Cory Mitchell, CMT

Want to learn how to scan for and trade these patterns? Know which ones to trade and which ones to leave alone? Learn this strategy and others in the Complete Method Stock Swing Trading Course. 

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.