Focus for this week is on how I find good setups for swing trades (Long only). You all know that I like to keep my analysis simple. I don't get much into MACD, RSI and other similar indicators. Therefore even for swing plays, I consider price action combined with key support/resistance levels. Here is the list of stocks that I narrowed down after scanning for high-probability setups that show good risk and reward as well.
$CLX $JKHY $MKTX $ATVI
I will show you exactly how I find these. No difficult science behind it. But let us review these charts first so you can keep an eye for possible entries. And remember always define your stop-loss. I like to stick with chart-based stop-loss and let that decide how many shares I can get in. If you get into swinging options for these names - do buy time by going out few weeks as you choose an expiration date.
$CLX: Clorox has been in the news recently due to the COVID-19 situation. Everyone stacked up on house hold cleaners and other disinfectants. The stock gave a good run and now cooled down this past week. 20 EMA has been a good support level historically (Red circles on the chart). We got a Trend bar failure in daily time frame on Friday. The price is also sitting at a resistance turned support. Conservative traders can look for a Bullish daily close to go long above it OR if you are an aggressive trader, you can get in if the price starts moving above Friday's high.
$JKHY: This payment processing company broke out of an Inverse Head and Shoulder formation. Good price support coming up as 20 EMA also catches up. One can use the $175 price as stop-loss if you get in. The length from head to neckline is approximately 40 points. That means the measured target above the neckline ($170 level) becomes $210. So almost risking $10 per share initially (if your stop-loss is $175 or a bit less) to gain $25 to $30 per share in profit. Not bad....
$MKTX: Its a financial technology company which has shown some good uptrend. We got a Bullish daily close on Friday right at 20 EMA. The chart is displaying Falling wedge pattern in an uptrend. Moreover, a possible Bullish Hikkake is in play as well. I am a buyer of this name.
$ATVI: A video game company. Looks like most of the people ended up playing video games while in quarantine. The stock has displayed nice strength and forming a Bull flag pattern in daily time frame. The price is congested, but it gave a good time for 20 EMA to play catch up. If we drop from here and get supported, we can consider a long entry. Good overall price action with limited downside follow through on any red bars.
Now, a lot of you ask me how I find these names and if there is any scanner I use. Nothing complicated here. I use finviz.com to narrow down my choices. If you have membership with them, great. I do not and end up using their free scanner. It works fine. Click on the video below to see how UC and I like to narrow down our weekly candidates.
There is plenty of cool stuff to learn and review on the web. But very few places where you can find something that is actionable. Therefore, my effort and blogs are geared towards something that you can use in your trading, and not just a dual faced commentary where writers won't give you exact commentary in fear of being wrong. As a trader, it is completely okay to be wrong. As long as you are managing your risk properly - there is no worry.
Have a good rest of your long weekend
Ainee & UC