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13 negative breadth days in last 20 days

Posted on 5/23/2016

Last 20 trading days  have seen 13 negative breadth days. As a result of this steady selling pressure the Secondary Breadth indicators have turned negative. But Primary Breadth Indicator or Number of stocks up 25% in a Quarter continues to be positive.

As has been the trend in last 18 months or so big breadth thrusts have not followed through and have lead to extended range bound action. This action looks similar. 

Deteriorating breadth pressures the rally

Posted on 5/13/2016
In last 8 out of 11 days there were more breakdowns than breakout. It indicates steady distribution in to strength.

The sectors that had bounced from weakness in many cases are having hard reversals indicating the bounces were just counter trend moves.

Some pullback after a strong bounce is to be expected , but if breadth continues to deteriorate at this pace , the rally will have tough time sustaining itself. 

Even IBD shifts focus to swing trading

Posted on 5/02/2016

As many of you would have noticed IBD is now promoting its swing trading service. It is reflection of the range bound nature of the markets.

Stocks do not move for long period of time but when they move they just don't walk they sprint. This phenomenon is more pronounced on stocks with established momentum profile. A surge of buy interest in short period of time creates these kind of powerful momentum bursts. This bursts do not last long , they can lose momentum quickly in 3 to 5 days.

If you set up a method for finding and trading these kind of setups on daily basis you can find these setups on your own.You can scan for stocks with established momentum that are having mini pullbacks. If market is in uptrend you will see hundreds of such setups. If market goes in to correction , these kind of setups automatically dry up as number of stocks with momentum drops on bullish side while bearish momentum stocks increase. At the beginning of new bull move, you will see proliferation of these kind of setups.

Once you establish a scan for these kind of setups, these start showing up on breakout soon as market opens. By first 15 to 30 minutes many stocks breakout. If you enter early you can profit from the move during the day. As the day progresses you will find more and more setups.

In these kind of swing trades you want to put as close a stop as possible. Because the entire logic for buying the setup is that the strong momentum will continue next day or in next 2 to 5 days and stock will never revisit the breakout level. If that happens the momentum burst has failed. So stops of around 3 to 5% are good enough . Profit targets on these kind of setups are 8% to 20%.

This kind of swing trading is relatively easy to master and offers you thousands of opportunities. You can control your risk very well and don't need to know fundamentals of stocks to trade. You do not need expensive software to trade this. You don't need to subscribe to any service or attend expensive thousands of dollar worth of courses to master this. As long as you are motivated and willing to put in efforts for sustained period of time till you can develop expertise in this, you can learn this no matter your age and sex.

If you study the highlighted posts on this site in side panel , you will find complete details for setting a swing tading method on your own.