Setups for Week of 10/11-10/15

There’s no time like the present.

Simply put, this is the best market environment for swing traders seeking to ride the prevailing trend since at least late April of this year. The reason why I was so adamant about maintaining a cautious posture (with a heavy cash position virtually at all times) throughout the course of the summer was to be able to preserve enough capital to profit from a healthier market down the road. Indeed, based on the price action and abundance of issues acting constructively, I believe that time has arrived. We have seen leading stocks become extended, consolidate, and then continue to move higher. We have seen laggards begin to catch a bid after working through bases over the past several months. Finally, we have seen high momentum names suffer sharp bouts of profit-taking without upsetting the bullish progress made by the broad indices.

Thus, despite the fact that we are in the midst of earnings season, the bulls have earned more than the benefit of the doubt. In my estimation, there are still plenty of stubborn bears and underinvested bulls who need to capitulate and start chasing this market higher before we will arrive at some form of a top. As the market continues to act better, I am more apt to let my winning positions run. However, cutting underperformers remains a core strategy.

Below, you will find my top setups for the upcoming week. Feel free to pick and choose whichever setups best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk. In general, I prefer a trailing 7-8% stop loss, unless otherwise indicated on my annotated charts.

I hope you find these ideas helpful.

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