Quote:
Originally Posted by Rookie
I realize there are different ways to evaluate stocks for overall performance but finding stocks for
swing trading has become a little more difficult. Could you advise a few ways we can look for the stocks that would help us if we wanted to swing trade.
thanks
Rookie
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Hi Bill,
For a good swing trade stock, you want one that has a long term up trend (that way if you make a mistake, you are still good to go). A good example of a swing trading stock would be SU (my 2 cents anyway).
1) Sector based approach
Pick an uptrending sector/commodity, etc.. For example: Oil or potash (* these examples have been uptrending for quite a while). These commodities have had extreme movements. Companies that produce these commodities should (and do) have a similar movement. (**We are not trading commodities, but companies that produce these commodities).
Choose a midcap company in that sector with good fundamentals. The reasoning behind the midcap choice is that they are not too small for risk, yet not large enough to have little growth potential. (***it is not guaranteed that the commodity examples will continue on this trend)
Use fundamentals to choose the company, technicals to trade the stock.
2) Screening
There are quite a few screens that can get you started. Here are some examples:
Example 1
click here: (band screen) You will want to add a volume ratio into this screen to reduce the results, something like 20 day volume ratio greater than 1.2.
Example 2
click here: This is a good example of price and volume ratios as well as moving averages.
Example 3
click here: MACD with price and volume ratios.
3) Seasonal/income stocks
Seasonal or income stocks are also fun to swing trade, however they take some research to find. This is done the traditional way of research followed by more research. Once you find one, these stocks typically can provide at least a year of swing trading entertainment.
Let me know if this helps
Alex
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