When we scan for stocks, we like to find “strong stocks getting stronger.”
One way to do this is to identify stocks closing up the most days in a row.
With the market itself up five days, here are six S&P 500 stocks up roughly NINE days in a row:
We START a swing trading process by scanning for stocks that catch our attention.
Right now, the following stocks are closing up the most consecutive days in a row:
Google (GOOGL), Biogen (BIIB), MMM, Lockheed Martin (LMT), Yum! Brands (YUM), and Aflac (AFL).
Once we have these candidates, we can decide what to do based on our experience/risk tolerance.
Newer traders should identify a strong trend in motion and aim to buy pullbacks/retracements in that trend.
For that, these stocks will become watch list candidates for future pullbacks (assuming the larger trend is up).
More aggressive/experienced traders can step in front of nine days in a row to the upside by short-selling or “fading” the persistent price action.
The thesis is “what goes up must come down” and though we probably won’t see a FULL retracement, we’ll see at least a partial one and that’s where you profit from an overextended swing.
You’re just trading it down to a rising moving average or key trendline (or price level).
Either way, with these six candidates, you have additional homework to do to discover your own trading opportunities.
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Corey Rosenbloom, CMT
Follow Corey on Twitter: http://twitter.com/afraidtotrade