Chop, chop, what to do?

HCPG #IBD Partner

With the market smack in the SPY 255 – 270 range we’re not finding that many candidates for swing trades that we think will follow through as most of them (we tested a few last week) are just fluctuating up and down with the choppy tape. One strategy we like going forward for potential trades is to look for

a) stocks that fit our momentum criteria in terms of fundamentals and technical action

b) out of stocks that fit first criteria, those that have decent technical patterns

c) put on watch-list post earnings for potential trades.

Reality is that some will gap down, some will gap up too much, so actually in the end only a small portion will trigger.   But doing the homework for a bunch to find the one is  a reality of the grind part of this job.

So here it is step by step:

1. First we set up a screen on MarketSmith that we like for momentum (we called it momo) and it spit out over 67 candidates:

This screen combines momentum fundamentals (strong growth) and technicals:

2.  Out of the 67 stocks we look for recognizable patterns that we like (and if you want help with that you can choose to turn on Pattern Recognition.

3.  Out of the candidates that make that list we look at which ones have earnings on deck.

Here are three for your watchlists:

MA with earnings out May 02 — love the flat base here on the stock near 180.

WYNN with earnings out tomorrow with a nice flat base near 194:

CAT also with earnings out tomorrow and we like it on a breakout of 158:

When in trending markets it’s easy to find swing candidates.  When in range markets like this stocks often need earnings boosts to leave range.   This is an easy strategy to copy — either set up screens for your own criteria as we did above, or go through pre-determined lists such as the ones in IBD 50  which you know will already have solid fundamentals and price action.

Hope that helps and that you’re enjoying the blog.   If you want to try out MarketSmith for a trial click here.

 

$MA $WYNN $CAT #IBDPARTNER