Sometime back we looked at the basic philosophy behind swing trading . In that post we also looked at some of the books on swing trading. In next series of posts we will look at some of the details of method discussed in these books.
We will start with Dave Landry. The basic idea behind all the Dave Landry set ups is "pullback" in a strong thrust. The objective is to capture the thrust after the pullback. The method works only in stocks with momentum.
Dave Landry's Persistent Pullbacks
- Stock should have 20 bar persistence before a pullback.
- It should be up at least 10 points in 20 days.
- It should have a pullback.
- Enter when the trend resumes after pullback
- Rule for shorts are reverse of the buy criteria.
- Scan for 20 day persistence.
- One way to do this is using our relative linearity or fractal efficiency scan.
- Other ways is by linear regression.
- Or another way is by defining persistence as ability of stock to make say a new high every 3 days
- Stock should be up 10 points in 20 days prior to pullback
- Condition to indicate a pullback in stock meeting above condition.
- Condition to show trend resumption after such a pullback.
- Some liquidity condition to eliminate low volume stocks