Breakout setups for swing traders
Stocks move in momentum bursts during bullish periods in market. This is the basis for both pullback and breakout swing trading.
Stocks exhibit momentum bursts of 8 to 20% during this period( lower priced stock can even have bursts of up to 40%). Such bursts may or may not have clear identifiable catalyst. These bursts last for 3 to 5 days.
All such momentum bursts start with a range expansion. The price moves in the direction of range expansion. Range expansion basically means a day which is up bigger than last 5 to 10 days bars.
Pullback buyers buy in anticipation of such range expansion. They focus on the low momentum phase or pre range expansion phase characterized by range contraction.
A successful momentum burst will lead to immediate follow through and the momentum dies down in 3 to 5 days.
To find these kind of setups one of the ways is to scan for range expansion of certain magnitude. Everyday I run range expansion scans to find the swing trade candidates. Some of the good stups from last night scan are:
- MKTO
- DDD
- HAIN (current open position)
- VC (current open position)
- SNA
- EQM
- CEB
- CM
- EJ
- ZLC (current open position)
- EMES (current open position)
- MOD
- CIMT
- AUDC
- OPK
- CQB
- PZE
- CGA
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