We had no setups yesterday.
I went through the top NASDAQ stocks and the Dow 30 again. What a difference. While most of the NASDAQ stocks peaked weeks ago, people are diving into things like KO and F as if it's some sort of new religion.
From a swing trading point of view, it's problematic, since the whole idea is to get in on a swing reversal and ride a single up or downswing. For example, F began the current upswing on December 5 and has been going up ever since. There has been no retracement setup, not even a pause in the form of an inside bar, to set up an entry on the buy side, and I'm not about to just close my eyes, buy and hope for the best.
If we take a look at the price action over the past three days, you'll notice that it's gone up on ever lower volume. Yesterday's bar was an expanded range one, a tall candlestick. Given tomorrow is the quarterly expiration of options, I would not be surprised to see a sideways day today, and that would form a harami pattern. And quite often, we've seen dramatic reversals after expiry.
KO is much in the same boat as Ford. You'll note that virtually all of the candles on this upswing have been very tall indicating that people are jumping in big time on increased volume. Yesterday's inside day was a pause in the upswing, but it could also be a stall in the upswing. This is one where you could play a surprise move on the downside intraday if yesterday's low is broken. You could also set up a swing trade on the short side if yesterday's low is broken in anticipation of a pullback, but this is typically a one or two day hit and run.
Did anyone ever imagine that TWX would look like a net stock? Well, I guess it has become one overnight. This is perhaps the ugliest bull flag I have seen in a while, but the fact is that it is a small pullback where we can set up a buy on break of yesterday's high that targets a test of the December 15 swing high.
I will be going over the mechanics of swing trading today in the workshop, and will edit the transcript for upload over the weekend.
03.12.18 09:09 #