Stock SWN: From Zero to Hero Way Back to Zero

Dec 15, 2015: 2:05 PM CST

Southwestern Energy (SWN) gives us a textbook example of the cycles a stock goes through from beginning to end.

It’s part of the “Life Cycle” of a stock move, and we have few examples better than this one.

Let’s highlight the progression from Accumulation through Realization to Distribution and back to where we started over the years in the birth to death life cycle of SWN.

For background reading, check out our premium lessons:

Introduction to the Accumulation and Distribution Cycle

and “Active and Passive Methods (Advanced Acc/Dist)

Mainly a stock starts a long-term growth cycle from a long base in a process called “Accumulation.”

Big funds quietly acquire large positions over time and eventually the stock price rises into a new uptrend.

The uptrend continues through the “Realization” or “Mark-Up” phase which can last years.

It’s this period on which we focus our swing trading and investing decisions – stocks in Realization.

There are specific techniques and indicators we use to help us make this determination and manage positions.

From there divergences undercut the rally and the same big funds “distribute” or sell shares at a large profit, often to the general public (retail traders) who often are most bullish at the highs (ahead of trend reversals).

Eventually the stock gives way to Mark-Down from the Distribution period which – like Accumulation – can take months or even years to develop.

Naturally, swing trading opportunities occur in all phases of the Life Cycle (though we focus our attention on the specific  “Mark-Up and Mark-Down” periods).

Use SWN as a textbook example of how this cycle progresses – and how trades develop within the cycle.

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Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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One Response to “Stock SWN: From Zero to Hero Way Back to Zero”

  1. Southwestern Energy Shows Cycles of a Stock Says:

    […] By Corey Rosenbloom […]