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What to look for in good anticipation setup

Posted on 12/31/2015
The overall market has been range bound for over a year and YTD the S&P is up only .22% as of yesterday close. In this kind of market many breakouts do not have big follow through. So one must supplement breakouts setup with anticipation setups. That way you enter a stock quickly and can capture the breakout day gains also.

ACOR is an example of kind of stocks I look for in anticipation setups


What to look for in good anticipation setup
  • series of narrow range days in pullback/consolidation
  • orderly pullback with no 4% b/d during the pullback or consolidation
  • low volume pullback
  • low volatility during pullback
  • linear first leg if looking as continuation setup
  • Stock should go up smoothly and not in volatile manner
  • 3 to 10 days consolidation/pullback
  • not up 3 days in a row
  • some immediate catalyst like earnings surprise or recent earnings acceleration
In order to find stocks like these you must develop a process to run after market close. Run scans on stocks with established  momentum and identify good candidates. Once you develop expertise in identifying these kind of setup it takes you 15 to 20  minutes to find good setup for next day.
Next day you can enter them as soon as they start to breakout. You can use price alerts to notify of a breakout or use pre set orders to enter these kind of setup.

AMZN is an example of recent trade like this which made multiples of my risk in just 48 hours. In this kind of market environment where moves are of few days that is a good setup to have in your tool box.


This is a trade I entered yesterday right at market open. The stock is up 7% for the day. Stock had very good anticipation setup pre breakout.

If you are serious about making money swing trading then you need to develop expertise in setups like these. Once you know how to find and trade these kind of setups you can find several hundred opportunities like these in a year.



OLED good example of anticipation setup

Posted on 12/30/2015

The big advantage of anticipation setup is t allows you to find very low risk trade ideas. If the trade works the trade gives you multiples of your R in just few days.

All that is required is 15 to 30 minutes of work in night identifying good setups and then entering early.

By end of the day it was up around 7%. For very little risk this is now multiple R trade.


AMZN is good example of what to look for in an anticipation setup

Posted on 12/29/2015

AMZN is good example of what to look for in an anticipation setup. As you can see it was highlighted in my list of stocks to watch yesterday before open. It was good buy in first few minutes. From that buy point stock is already up 10 points.






Anticipation Watchlist for today

TYL AOS MGLN LEA FB ALXN ELS JKHY MSFT RARE CNC RJF MYGN LNKD AVGO CEMP HD NVDA ALK ATVI NOW SFLY SQ VTL ADSK DG LDOS CSIQ SYKE SBUX CLI GE LB PLAY NGHC HOLI SFS IDTI SAAS NFLX IMMU ORBK OLED TTWO NEO ULTA VRA NOC MEET RTN JASO SWHC AEIS IRBT NUAN SCTY NTGR EXTR BDX CRAY PLAB RTEC HMSY MPWR SKYW NSA SMTC MXL TAP BZUN VA FNSR TEVA FONR AERI VLRS SGMO ACRS SEDG CAB LXRX IMGN SA AKBA RLYP SBH ATHM HA DAL SRG VLO NOAH PRTA OSIS

If you are serious about making money trading then learn how to identify and trade anticipation setups. You will find several opportunities with low risk in a year like AMZN.

Bullish Anticipation list for this week.

Posted on 12/28/2015
Weekend allows you to do your work and go through scans for stocks with various momentum characteristics and generate list of stocks ready to breakout. 

For someone like me it takes couple of hours of effort on weekend to generate the list after going through around 500 to 800 stocks depending on market conditions. 

The list typically will help you find 3 to 5 trades during the week in most market conditions. In bullish markets you will find 10 plus good trades. 

As you can see lots of stocks are setting up for breakout currently.  Any improvement in Indexes on high volume and breadth would have these stocks taking off.

As of now the market is still not really the kind where you get big swings of 3 to 5 days. Many breakouts are just one day wonders.

Personally I am still in cautious mode and capital protection mode . Most of my trades have been intraday kind.

Anticipation setups for this week

GOOGL GOOG ULTA NHTC AERI AMZN RARE PRTA MGLN SRG RJF CNC CAB NSA MYGN MSFT SINA FONR SFLY AKBA MXL SYKE PRAH VA ITCI ORBK NEO JASO VRA CYTK AVGO ELS PLAY RTN TAP JD VTL SEDG CLI SBUX GDDY LXRX NTGR ATVI OLED TOUR SAAS ENZ IMMU NCTY SBH SQ ALK WBAI VLO IMGN DG FNSR ALRM SFS MEET SGMO HA HOLI JKHY HMSY OSIS SWHC EXTR VLRS LSCC LXFT NUAN SRPT AGRO NGHC BZUN ATHM MPWR SA AEIS HD NOW TTWO TEVA NVDA NOAH AOS FB IDTI NOC SCTY TYL

Stocks setting up for breakouts

Posted on 12/22/2015
MNK BLOX LBIO FNSR CEMP HMSY TSLA NVAX DG AMPH LNKD IPGP SWM BABA TEVA SCLN ANF PODD GMED LSCC PANW HD GE RGR RTN ATHN TAP RTEC CRAY ULTA NKE TOUR NUAN HTHT EBS GOOGL IDTI ODC VRSN TYL NTGR AYI FONR ATVI MXL NTES HA AMZN CTRP STMP ITCI NCTY GDDY SQ NVCR

Stocks with  momentum setting up for possible 8 to 40% breakouts in next couple of days. 

How to find good anticipation setup

Posted on 12/21/2015


In order to find good swing trade opportunities using anticipation , work needs to be done after market close to identify stocks setting up for possible breakout next day.

Look for stocks with established momentum. That way you can narrow down your universe to few hundred stocks to look at instead of 7000. On the stock with established momentum you can run a scan for narrow range days that will give you 40 to 50 candidates to focus on for further analysis. From the 40 to 50 you can narrow down a focus list to 3 to 5 candidates.

The advantage of anticipation is you have time to research the  stock and only focus on stock with clear catalyst that can lead to big move.

For working people this method is good. You can identify the anticipation setups on weekend . Once you narrow the list you can  monitor that list for breakout during the week.

Here is a list I generated over the weekend for anticipation this week:

DG JBT MPWR JKHY RLYP NVCR FONR TOUR AMPH PODD IDTI LSCC ULTA ANFI SQ NCTY ALRM AOS VRA OSIS ATHN BABA TYL

If you are serious about making money swing trading a setup like anticipation setup is good starting point. 

Use earnings surprise to find swing trades

Posted on 12/17/2015
If a stock has surprisingly good earnings and it was not rallying in to earnings, it tends to go up post earnings.

Post Earnings Announcement Drift (PEAD)  is the name for this stock tendency. PEAD effect an be short term or long term. In long term stocks with history of continuously beating earnings estimate tend to go up.

You can use PEAD to find swing trades. Look for stock with big earnings surprise in recent quarters. They tend to rally on such surprise.

OME is an example of recent trade like that. OME had a 83% earnings surprise that resulted in gap up and 37% move in 19 days.



In order to find stocks like these you need to scan daily for earnings surprise and focus on stocks with constructive consolidation pre earnings that show positive reaction to earnings. 

I use  Marketsmith to scan for these kind of stocks. You can create a scan like this to find these stocks. 

 Many stocks in the scan continue to offer swing opportunities till next earnings season. If you do not have Marketsmith you can use free resource like Zacks to build your own list of earnings surprise candidates. 

Earnings growth and earnings surprise is one of the strongest catalyst for stock price going up. If you want to make money swing trading focus like laser on stocks with big earnings surprise. 



Look for low risk entry setups

Posted on 12/15/2015

You can not completely eliminate risk in the market but you can control and minimise it by doing better job of selecting the right stock, selecting the right time, and selecting the right place to enter it. This is part art and part science. 

As far as possible look for a entry where you become quickly profitable post entry and your stop is very close to entry. If that happens you have a very good setup.



The low range anticipation setup is that kind of setup. In this setup you have to identify a low risk entry point in an established trend. It involves some  elbow grease to find these kind of setups. 

The big advantage is you get very good entries and stops are in most cases less than 4% or so. As a result if the stocks make 8 to 20% move your risk reward is very good.

In order to find these kind of setups I focus on stocks with established momentum. That increases your probability of success. On that I scan for low open to close situations. This brings depending on market conditions 100 to 300 candidates to study. After that in first cut I eliminate the  extended and very volatile movers. That narrows the list down to around 10 to 20 stocks with linear trends and orderly pullbacks or sideways moves. 

On that narrow list then I look for some sort of catalyst like earnings surprise or earnings or sales acceleration or new orders or new drug trial . That gives 1 to 5 high quality setups or next day entry.

The focused list then I enter in my trading platform and set alerts on are in some cases create limit  orders at my buy points. For first 30 minutes I watch and enter them. Most of these kind of setups breakout early in first 40 minutes. Once in I put in a stop near low of the day or low of last 2 to 3 days. Once stock starts moving it attracts breakout buyers and once it is up 3 to 4% I move my stop up further to try and be as close to break even as possible. Once trade had 8% plus profit then I aggressively move stops t lock in at least part of the gains to ensure it does not turn to loss. As stock moves in my favor I move stops to lock in profits or sell in to strength.

 Not every stock sets up perfectly and acts according to plan but because the risk on these trades is very low you can have many shots at these setups. 

Using low range bars to anticipate entries is one of the ways to look for low risk entries. It can supplement other setups like breakouts and help lower risk. 

Stocks on my anticipation watchlist today

NCTY
HA
NTGR
STRL
IDTI
LDOS
CYNO
MAS
XLRN
SIX
ATR
ICLR
INTC
JNJ
MNK
ALRM

If you are serious about swing trading develop anticipation setups , that will help you find low risk entry points. Especially in market where many moves have been of smaller magnitude , anticipation is better approach. 

Control your risk

Posted on 12/14/2015


Controlling risk is No 1 job for a trader

Controlled risk taking is the name of the game if you want to make money and keep it in the market. If you do not have a good strategy for managing risk  sooner or later you will blow up. It is just matter of time.

The market has phases when risk is lower and you can be very aggressive and it has phases where you have to be way cautious. Best traders over the years develop strategies and tools to "anticipate" risky periods.

You have to anticipate danger while you are 25 miles from it not when you are few feet from it. This is where real skills in trading comes in. Traders who prosper for years develop indicators and tools to identify such periods and then reduce exposure aggressively  or change their trading approach to reduce risk.

Personally I use the Market  Monitor to control risk. It signalled this pullback ahead of time on 11/24/2015  when the number of stocks up 50% plus in a month climbed above 20. There was further confirmation when other indicators started turning negative and series of big volume days. By that time I was already in cash and only looking for short term intraday trades. As a result I manged to keep my account intact without giving up too much profits.

Market breadth is one of the ways to develop market timing tools , there are many other ways to do it also. Key is to have very sound risk management strategy, absent that you will lose big money. When you lose big money it affects your mood , your family , your health.

If you want to make and keep money trading remember your number one job is risk management. How you handle risky periods will determine your long term profits and survival.

AXON is kind of setup you want to find

Posted on 12/10/2015

Today morning I highlighted some anticipation setups. AXON was one of them. It has the characters of what to look for in a good setup.



PACB
NCTY
MRCY
AXON
SQ
ENZ
DLTH
INTC
WB
KBIO
ULTA

Once you do your homework on these you have to select 1 or 3 to focus on and enter right near open with close stop. AXON was one such setup. It is now already up 8.36%. If you had done your work you would be in already or even out with profit.

Breakout traders would be looking at buying it now. Which will be more risky.

Anticipating breakout  gives you good opportunities like these  if you learn to trade these. 

Look for narrow range days

Anticipation allows you to find very low risk entry points in stock. If you enter with very tight stop then the risk reward can be good.

FIVN is an example of such setup . It had 5 narrow range days  before yesterday. Tuesday  was the narrowest day of them.




It showed up in the Anticipation scan. Stock has established momentum , so this is part of a continuation setup. Out of few anticipation setup it was  the best. The entry was at open and it just exploded in next 15 minutes. It did pullback due to market weakness a bit but ended up 7% up for the day.


To find setups like this you have to run a narrow range day scan on stocks with established momentum and then individually inspect each candidate to further reduce universe to 3 to 5 best ideas. It takes at best 15 to 20 minutes to do this.

Here are some of the anticipation setups I am watching today:


PACB
NCTY
MRCY
AXON
SQ
ENZ
DLTH
INTC
WB
KBIO
ULTA

Organize yourself for trading everyday

Posted on 12/09/2015


Everyday do the same thing over and over in a systematic manner.
Once you have a well thought out method the day to day challenge is largely about implementing your plan.
That requires setting up a daily routine and adhering to it as far as possible.

Situational Awareness

We know swing setups work, but overall market conditions can have impact on the % of trades likely to work. So SA helps you in controlling your trade pace. In good environment you want to be more aggressive. In bad conditions you want to focus on risk management.
Question you need to ask daily for SA:
What is your market bias today
Is there a plan to exploit it
Is there an alternative plan

Anticipation

Anticipation allows you to control risk and get in to setups early or as they are breaking out. Anticipation is also useful on current open positions. If you have thought through what you will do under different circumstances on your open positions you are in better position.
Question you need to ask daily for Anticipation:
What homework have I done to identify good opportunities ?
What are the 3 to 5 very high probability opportunities I must focus on today
What is my plan for existing open positions

What is working currently

Different phases of market favor different kind of stocks or setups. Some time beaten down stocks do well. Sometime stocks with momentum do well. Some time value or growth is in favor. Knowing what is working helps you focus on hot opportunities.
Question you need to ask daily for What is working:
What is working in the market currently
What stocks and sectors are leading the market currently
What style and setups are working currently
What kind of follow through is happening

The hardware and software

All our good plans or intentions or setups are of no use if our hardware or software fails or is not optimum for trading.
Are you setup for today
Is your hardware in proper condition
Is your software working without glitch
What is your backup plan in case of failure.

Your mental state

Your mental state affects your trading. If your are well organised and in proper frame of mind for trading you will be successful. If you are excited, harried, angry, disorganized you will find same thing in your trading.
Are you calm, excited, harried , or confused today?
Are there distractions likely to affect your trading today?

Continuous improvement

As a trader you need to focus at least 25% of your daily efforts on developing new trading setups and ideas and on enhancing your trading skill and knowledge of market. A purposeful plan to do this will cumulatively help you transitions in to new setups and ideas as market changes.
What is your plan for enhancing your market knowledge today
What is your plan for enhancing your trading skills
What is your plan for enhancing your trading mindset

What needs to happen for me to be a confident and in control trader

Do I have resources to get there?
Do I have the burning drive to get there?
Everyday using this kind of framework will make you a better trader . If you rigorously follow these kind of checklist you will see improvements in your trading in 90 days.

If you are new to trading

Posted on 12/08/2015
As the year winds down and new year approaches lot of people start thinking about their trading or investment strategies. I get lot of emails from readers of this blog asking advice on how should they start to learn to trade. 

For a new trader the most important thing is to do proper setup selection. If you can get it right you will  have quick success, if you get it wrong you will spend months or years  flirting from things to things.

When you decide to trade you have a choice of setups to trade. Setup is complete set of conditions involved in trading a particular method.

A well defined setup will tell you :

  • what kind of stock or etf or instrument to buy
  • why
  • where to buy it
  • how much to buy
  • where to put stops
  • where to exit
  • what kind of profit can you expect with this kind of setup
  • how many trades can you expect with this setup
  • what overall market conditions favor this setup 
  • When should you not trade this setup
  • when should you risk less or more
If you have a well defined setup idea you should be able to replicate another persons trade on your own.

If you are a beginner trader what you need most is a complete setup idea and template with detailed process flow and steps. If you find that early in your trading career it will save you time . money and frustration.

As a trader you have a big choice of setup ideas. There are hundreds of setup ideas in public domain. If you exhaustively study the books written by traders or about traders, read blogs written by traders and do some research you will come across hundreds of setup ideas.

Some of them are explained in detail and all details to trade them can be found if you dig a bit. In fact life for new trader is much easier today due to internet. Everything is available in public domain.

It is a different issue that as a beginning or struggling trader you may not even understand the importance of setup or a complete setup.

If you are a Stockbee blog reader you will see that my day in and day our focus is on trading specific setup. And if you are motivated enough and go through last six months of posts you will find all kinds of details to trade my kind of setups. It is all detailed here.

There are setup I currently trade. And all of those are detailed on this site and you will see several trading blogs trading similar or variation of those setups. Many trading blogger are Stockbee members or were members at some stage and now trade some of those setup ideas or have developed own setup.

There are setup ideas I have discussed here but do not actively trade. Does not mean those set up do not work but for practical reason I focus only on few setups. If you go through posts in sidebar you will see many examples of that. All of those setups work.

Besides the setups I trade I know of lot of them because of the Stockbee members site. There are many setups discussed by members that they trade, you will find at least 40 to 50 setup ideas traded by members discussed in detail and some share their trade real time.

There are some setup ideas that produce big winners. Episodic Pivots is one such setup idea. It finds big winners of 100% plus kind magnitude. But it trades infrequently as those kind of setups do not show up everyday. Trading a setup like EP requires you to understand that and accordingly be very selective.

Swing trading setup ideas produce frequent but small profit. The Momentum Burst kind of setups I trade is one of those kind of setup. It produces hundreds of trades. Advantage of setups like that is it allows you to profit with very little drawdown. The Anticipation setup that I have developed in recent years as my account has increased significantly find very low risk high potential non breakout opportunities.

Setup ideas should not be a problem for you if you are a beginning trader or struggling trader. What you might find difficult to find is detailed step by step process flow to make them work. But that problem is also not a serious problem if you are motivated trader.

The problem is not lack of setup ideas. The problem is lack of skills and fluency and confidence in trading them . Setup ideas work when you spend sufficient time developing skills to trade those setups and becoming proficient at them.

If you are a new or struggling trader hunt for detailed setup ideas and templates.

Market monitor signalled this pullback few days ago

Posted on 12/04/2015


When breadth becomes extremely bullish pay attention , it signals likely pullback. As you can see few days ago we had 23 stocks up 50% lus in month. These kind of extreme readings happen infrequently . 
But when that happens pay attention , it signals likely pullback ahead. If you know that you can proactively take steps to protect profits or step off the gas.

See my previous post on this. 

To make money in the market think rationally


One of the big problem you will see in market is that there are lot of illogical things floating around based on some half baked ideas or assertions.

It is like folk medicine. All kinds of remedies are offered as cure and most of them are completely bogus claims.

Understand why stock go up and how they go up and what kind of buy points are ideal entry points.

You must and I repeat must have a rational understanding of stock moves. If that rational is based on actual market observed behavior and research you will have success.

Why do stock move up or down

What drives those moves

Why do funds buy some stocks and why sell some

Why are some funds more successful than others.

Why have certain buy points around for years and still work.

Why do underperforming fund do things they do

These things will give you some perspective and will help you avoid following wrong kind of setup ideas and help you avoid chasing methods which are not rational.
Posted on 12/02/2015


If you do a good job of anticipation you will catch some good fish.

Anticipation is good for people who want to be in control of your trading. Most of the work in anticipation is done during non market hours. As a result you have more time to plan your trade and research a idea. 

Once you have identified a stock as possible good anticipation candidate then you can research it to find if it has some immediate catalyst which can lead to it going up. 

Here are the stocks on my anticipation list today:

OZRK WTW SRPT UIHC TOWN EXTN CATY SWHC RTEC LITE CYTK PPBI CVCO ANGI BNCN IOSP WAL OA LEA STMP

If you are serious abut making money swing trading then build scans to find anticipation candidates and spend 15 to 20 minutes daily finding good 3 to 5 candidates. If you are working you can do this on weekend. 

Anticipation Setups for today

Posted on 12/01/2015
Anticipating a breakout helps you get an early entry and can improve your per trade profits. It can also lower your risk as your stop is close. It can help you profit from even smaller moves.
The Stocks shown below are stocks with above average momentum. These are the fastest moving stocks in the market currently. For swing traders they offer good 3 to 5 days opportunity
Stocks with above average momentum, move in sharp 3 to 5 bursts of 8 to 40%. Swing traders focus on these kinds of setups.
Anticipation Setups for today
LNKD STMP ASGN LEA PTLA OA IOSP GIMO BNCN NXTM PCTY CRAY MSFT LXRX LOCK LDL PPBI CYTK PAR IMMU ENZ TOWN EXTN ANGI PMC ATEN FIVN ERII LFVN CHEF PFGC OSIS UIHC

These are the stocks I am looking at currently for possible breakout in day or two.