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I go through many charts every single night. In a trending market, I am apt to find so many attractive setups that I usually have several different lists of scans, ranked by quality. Although we have not had the pleasure of operating in a trending market since I have had my own tab on iBC, we may indeed be on the verge of seeing one now. I have fondly named my very top tier of scans, “The Elites.”
What am I looking for? Quite simply, in a trending market I want the silky smooth leaders. I am not looking for laggards to snap back from oversold conditions. Sure, the Ragin’ Cajun and I are always looking for ascending triangles, bull flags, BTFO setups etc.. However, what I want above all else are stocks “flying the friendly skies.”
What I mean by that is I want to be in those stocks which are operating above all of their major moving averages on their daily charts. Moreover, they should have no big menacing selling volume. I would also like to see all of the major moving averages lined up in temporal order (20 above the 50, 50 above the 100, etc.) with all of them sloping up as well. The analogy is to an airplane flying above the clouds at 30,000 feet, with only occasional light turbulence as the plane swoops down and touches the 20 or 50 day moving average “clouds.”
If the broad market makes another higher low in the coming days, below are the charts of my “elites,” that I am eyeing for long swing trades. I am not going to give my usual annotations, so as to keep things very simple.
You are looking for three prongs to be satisfied:
- Price is above all of the major moving averages;
- The volume pattern is bullish–look at the size and quantity of green versus red volume bars;
- The moving averages are inclining and not too entangled with each other.
Once that three pronged test is satisfied, you will look for an entry as the stock comes in to touch the benign clouds (the 20 day moving average, or thereabout), so long as the selling volume is not heavy. You do not want to chase these stocks after they have moved higher four or five days in a row. Take a step back and think about this strategy. What you are doing is waiting to find yourself in a trending market higher, and then you are buying the leading stocks on light pullbacks.
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Don’t forget PWER – good luck tomorrow!
looks great thanks moose you too
VMW? Why not on the list?
yup–good look
Wonderful post. Exactly what I want to see happen.
Very well articulated!!!
thanks hawaii
twiata!!!
this post should be made a “sticky” somewhere. some where like: library of congress, smithsonian institution, hooters etc!!!
ty,
duane
thanks d!
Hi Chess, just so I’m clear, you’d look to hop into some of these names once we enter an overall trending market? Would that be once we base out and then break higher over the mid-June high of around 1130? I suppose it might take more waiting after that, because the moment the overall market breaks higher and looks like it’s trending, these stocks would likely be exploding and you’d then be chasing. Just thinking as I’m writing I guess…thanks for the picks…
you are correct that it can be tough to identify the inflection point–I call it threading the needle. I will take some light positions in these names first, and see how it plays out if the broad mkt cooperates and makes another higher low and gets above 1131
what you’re doing though is pretty simple… anyone can do it… find highs… so it’s not going to work.
NFLX was a leader too a few weeks ago. So was AKAM. need to have a better plan cuz it’s quick or dead now.
There were clues in both of them to get out. I do not advocate chasing -as I indicated in the post. If the selling volume picks up, you start to get cautious. Simple, yet effective.