Happy New Year everyone.
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.
Here are the data points that matter currently, signaling the market is still healthy (not a forecast…just what is happening right now).
- Nearly 84.35% of NYSE stocks are above their 50-day moving average (top indicator). 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 % (second from bottom). 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 at a high (bottom indicator) along with the S&P 500. This shows wide participation in the number of stocks advancing.
- All the major indexes are performing well currently (not selective). This is good. IWM, the small cap stocks (purple) was a bit weaker than the other indexes over the last several days yet the overall trajectory is up.
- From a price action perspective, we are in an uptrend over the longer-term and shorter-term. The S&P 500 is attempting to break higher after moving sideways in December.
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 Watchlists
Here are the stock swing trading watchlists for Contraction Continuation Patterns for the US and Canadian markets as of January 2. 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).
THESE ARE WATCHLISTS, NOT TRADE LISTS. Only a fraction of the stocks on a watchlist will meet the entry requirements and actually trigger an entry. Patterns that are setting up for an entry are compared to each other (and ideal trades) and assessed based on reward:risk, strength, and pattern integrity. This determines which stocks have orders placed in them.
US Swing Trading Watchlist
232 stocks met the scan criteria this week. That was reduced to this…
NUAN – Contracting. Consolidating. This is a more steady climber. It hasn’t shown a strong tendency to
DY – Contracting. Consolidating.
FLGT – Contracting.
NIO – Contracting.
And some others…
BALY – Contracting.
TGH – Contracting.
OESX – Contracting.
HBM – Contracting.
Canadian Swing Trading Stock Watchlist
There were 107 stocks on the Canadian scanner list this week.
TXP.TO – Contracting. Consolidating.
VSBY.CN – Contracting. Consolidating. (Contracting less than 1 month at the moment)
SMT.TO – Contracting. Consolidating.
DEF.V – Contracting. Consolidating.
OLA.TO – Contracting. A consolidation here would be nice.
PLTH.CN – Contracting.
And some others…
CGG.TO – Contracting.
EXRO.V – Contracting.
EFL.TO – Contracting.
ML.V – Contracting.
HBM.TO – Contracting. Still small.
AHC.TO – Contracting. Still small.
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.