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.
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