Category: Commentary

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High-momentum stocks can be excellent sources of swing trades because they tend to make big moves in both directions. Here are a few stocks with a relative strength rating of 99 that might offer good opportunities in the next few days/weeks:

AMRN bounced from its rising 50-day moving average. It needs to clear $20 to get me interested on the long side.

CRON – cannabis stock working on a high tight flag. It needs to clear $22 – 22.30 to get me interested.

SE – a few days tight of tight-range consolidation near its all-time highs.

Check out my last two trading books:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, hot to trade them, hot to make money with them.

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Stocks that receive favorable market reaction after reporting big earnings surprises tend to keep going higher in strong bull markets. Some recent examples include MELI, IONS, ZS, and TNDM.

A favorable market reaction is a high-volume range expansion to new 50-day high – a gain of at least 5% on at least 2x the average daily volume.

Here are some stocks that went up immediately after their earnings report after beating estimates by a wide margin that might be setting up for another leg higher:

EXEL broke out from an eight-week base.

GKOS pulled back all the way to its 50-day moving average where it bounced and now it is setting up again for a potential breakout.

DXCM didn’t gap up after their big earnings surprise but managed to consolidate in a tight range near its all-time highs and it is now setting up for a potential breakout.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.

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The major U.S. stock indexes pulled back from areas of major resistance. $280 for SPY, 175 for QQQ, and 160 for IWM (Russell 2000). Is this the beginning of a significant leg lower or just another garden-variety shallow correction. Judging by the price action in many momentum stocks, it looks more like the latter.

Momentum stocks are often leading the market, higher and lower. If the market declines and most momentum names go sideways or even try to break out, the correction is most likely a buying opportunity. This is exactly what are seeing in the current market.

Keep in mind that no indicator has a 100% success rate. If some unexpected news comes out of nowhere and surprises the market, those same momentum stocks will get hit hard and will fall with the rest of the market. This is why I am using the expression “most likely” – it’s a probability, not a certainty.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.