2/06/2013

Swing trading using strength and weakness

As a swing trader you want to find a stock with strength or momentum. But for entry purpose you want to find a weakness on smaller time frame. In other words you are looking for a trend pause. Think of it like a train that is moving at 100 miles per hour that for a brief period slows down to below 3 miles and hour to allow you to hop on it.
The technical analyst call such trend pause as bull flags. You can scan for them easily in many software. The site www.chartmill.com offers a handy scanner for bull flags. If you run the scan today it gives you  handful of candidates like these :



CATM, EBR.B, CPA, DNKN, ET, ENOC, FRAN, GNW,

HERO, HUN, LVLT, MELI, MOV, NCR, OIS, QIHU, SM,

STEI, TSS, RIG, VRNT


One of the better looking candidates out of this scan is GNW. 


GNW  has been in momentum phase since December and is ranked 71 among Top 100 stocks by momentum. It has been going sideways for last 10 days. That is the trend pause in fast moving trend. A breakout might be a buy for swing trade. Aggressive trader might buy in anticipation. 
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