51 Essential Swing Trading Posts From 2015

This has been an incredible year for both me and this blog. Personally, I hit a major level in my trading accounts, moved my family to San Diego, mentored 14 new students, continued to run the part-time swing trading program over at my former student's industry leading website and started a new significant income stream through day trading.

Specifically with this blog, I made a conscious effort to focus this blog on the mental aspect of swing trading. Judging from my inbox, these posts have had a major impact on many of you.

Let's review some of the best posts. I've divided them into two categories: the "mental game" and "setups". One sentence accompanies each post, giving you it's essence. 

Without further ado, here are 51 killer trading posts that are guaranteed to increase your swing trading IQ.

The Mental Game

• 5 Steps That Will Save Time and Create the Perfect Swing Trading Watchlist: It's all about taking a holistic approach to trading and not relying on scans.
• 9 Steps to Making Your 2016 Trading Goals Stick: This is how you actually achieve your goals.
• How to Embrace Your Fear in Trading: The Trading Intelligentsia Has it Wrong: Don't worry about what everybody else says you are supposed to do, and the right kind of fear is a good thing.
• The Art of Learning to Trade: Become a Master and Not A Jeopardy Contestant: The importance of mastery and the unimportance of trading "knowledge".
• When you have the courage to do what you love, even your friends will call you a fool: You must believe in yourself to succeed in the trading game.
• It's scary buying the dip and what ever happened to the Zune: Every great stock had deep pullback due to irrational fears.
• Why are you trading low quality stocks and setups: Only trade the best setups.
• The Trader I Strive To Be: Focus on your strengths.
• How's Microsoft Doing?: Ridiculous dinner conversation all traders deal with.
• Market Speculator FAQ: What Indicators Do You Use?: It's all about price action and volume.
• Trading should be fun: Happiness leads to good decisions.
• The part-time trader advantage: Watching the market less has advantages.
• Swing Trading Smart Tips: Set It and Forget It: Walk away and let the stock do its thing.
• 100 Trading Quotes To Put Into Action And Change Your Life: The Series Begins: Series of trading quotes begins.
• 100 Trading Quotes To Put Into Action And Change Your Life: Paul Tudor Jones on Limiting Pain: Pain leads to bad decisions.
• 100 Trading Quotes To Put Into Action And Change Your Life: Caution Is A Risk: Too much caution leads to opportunity loss.
• 100 Trading Quotes To Put Into Action And Change Your Life: Bruce Lee On Creating Opportunity: Even bad markets have opportunity.
• 100 Trading Quotes To Put Into Action And Change Your Life: Machiavelli On Risk Management: Even the most aggressive traders protect themselves.
• 100 Trading Quotes To Put Into Action And Change Your Life: Michael Jordan on Limits and Trading Scared: Fear is an illusion that limits traders.
• 100 Trading Quotes To Put Into Action And Change Your Life: Will Smith On The Past, Present and Future: My story and being in the present.
• Psychological warfare for traders the Arnold Schwarzenegger way: Psychological battle and getting your mind right.
• How to overcome the fear of entering market pullbacks: Buying market pullbacks is hard but profitable.
• Cash as a position and why the best thieves never get caught: Always take the easy route in trading.
• Trading is a decision making game: Simplify the process: Simplify in order to make better decisions.
• The $10,000 question: Why traders are hypocrites about trading goals and blow up their accounts: Why traders blow up accounts and what we tell ourselves we want versus reality.
• Winning traders have a secret crystal ball: let me show you how to get yours: Increasing probabilities make it look like you can see the future.
• Stop gunning: The most frustrating aspect of swing trading: How to deal with dreaded stop gunning.
• The Power of One Winning Trade and Getting Your Mind Right: One winning trade builds confidence and starts a new trend.
• The smart way traders use Twitter: Getting past the love-hate relationship: Using twitter the right way.
• You must adapt to changing stock market conditions and how I almost killed my swing trading career: To beat the market you must constantly adapt.

Practical Setups, Strategy and Trades

• How to identify explosive bottom formation breakouts: Money flow and when the downtrend is over.
• 20 of your favorite swing trade stocks analyzed: Video analyzing twitter stock chart requests.
• 2 Smart Tips to Enter Pullbacks in Parobolic Breakout Stocks: How to enter stocks that are moving.
• Essential Steps for Shorting SPY and The Stock Market: It's all about the signal.
• The Common Sense Approach to Swing Trading Apple: A Measured Move: Clean breakouts give us measured moves.
• Chart of the Day: Facebook and the Round Number Breakout: Round numbers are psychological barriers.
• How to Trade During Market Selloffs and the Power of Support: The hardest, but most profitable entry.
• Chart of the Day: PANW and Relative Strength During Market Selloffs: Know which stocks handle post market selloff the best.
• Chart of the Day: How to Trade VIX: VIX is the trading vehicle during selloffs.
• Chart of the day: GOOGL and the moving average remount: Bread and butter setup.
• Chart of the day: AMAZON and the new high breakout: New highs signal next run.
• Stock Chart of the Day: IBB: Biotech was key in 2015.
• Chart of the day: PYPL: IPO stock everybody is watching.
• Chart of the day: GOOGL Revisited: W patterns.
• Chart of the day: Guidance Software: Breakouts.
• Chart of the day: Sketchers: Great example of the earnings breakout.
• Chart of the day: ULTA and the post breakout trading range: Trading the post breakout trading range.
• Ugly Chart of the day: BABA: Sometimes ugly charts are the best charts.
• How to Identify and Trade A Market Short Signal: Must know even if not trading it.
• Example of a Winning Trade and Smart Risk Management: SHAK: The golden rule.
• 21 profitable stock trading setups and the optimal conditions to trade them: Smart traders know certain setups work best in specific markets.

The Low Risk SKF Trade Setup

SKF is slighly bouncing off support lows. Support could break, but the setup still offers a good risk ratio and a trade that is easily managed. Enter as close to support as possible, place stop below support lows, with a target near resistance levels.

Trade Setup: USO

As noted yesterday, I entered USO at $28.32.

Setup: Oversold bounce, possible bottom formation. Stochastics are extremely oversold, which has provided for quick counter trend trades with this stock.

Risk: My stop is under price support around $26.50, with the 50 day moving average providing the initial target at $33.50. This gives me a 3:1 reward to risk ratio.

X: Low Risk Setup

X provides a low risk setup as it pulls back to the 50 day moving average. If the market tanks, X will go down with it, but losses are easily managed at this level.

Trade Entry: POT

I bought 150 shares of POT at $150.62 (trade posted on blog Friday morning).

The Setup: Oversold Bounce. Extremely oversold stock within bearish downtrend (topping formation). Stochastics extremely. Price is at March support levels.

Risk: Stop is now at entry level. Initial target of $160 hit. Target for remaining 75 shares is $170.

Trade Entry: NOV

I bought 350 shares of NOV at an average price of $60.54 (trade posted on blog Friday morning).

The Setup: Oversold Bounce. Extremely oversold stock within bearish downtrend. Stochastics extremely oversold in the 7-10 range. Price is at February-March support levels. While the lows have not been reached yet (50), the stock is so oversold that I expect some type of relief bounce soon.

Risk: Stop is in the $57-58 range. This is percentage stop, as price support at this level is loose and drops all the way down to $50. Initial target is $65, with the remaining share target at $70 and stop moved up to entry level.

Trade Entry: X

I bought 200 shares of X at $110.92 (trade posted on blog this morning).

The Setup: Oversold Bounce. Extremely oversold stock within bearish downtrend. Stochastics oversold. Price at April support levels.

Risk: Stop placed below support level, around $104. Target in the $120-130 range.



I hope to have the other trade entry setups posted later today.

Expect a Bounce in Nasdaq

The bullish setup that I had been watching and trading in the Nasdaq was obliterated earlier this week. While the trend is now decidedly bearish, we are nearing a strong support zone that could provide a bounce that can be traded.

If QLD (leveraged long Qs) drops down in the $70-70.50 range, I will likely take a position. It wouldn't be surprising for the bounce to reach the 50 day ma around $75. I would likely make $74 my target and place a stop in the $68-69 range.

Commodity Game Plan

I know a few people who are using this morning's bounce to deploy more energy shorts. However, I'm going to wait for a few more points to add to my existing short positions. While I agree we may get a quick drop here, risk/reward is not great until we get entries closer to the top of the breakdown bars.

Take a look at the charts of MOS and X, my existing short positions.

Ideal MOS entry: 100-102
















Ideal X entry: 126-128

Trade Setup: KSS

I have been following KSS for quite some time in the Trade Report. Retail, and KSS specifically, caught my eye as a bottom accumulation setup in early to mid July. The volume on the bounce gave clues that the bounce could lead to a continuation move.

Since that time, we have had two good setups. The first was on the break of the 50 day moving average. The second was on the pullback of the recent breakout highs in mid August.

The two key areas I am now watching are $52 and $46-48. Stochastics are extended, so I doubt we'll see a $52 breakout. I'd like to buy a pullback to the $46-48 area. This is no longer a bottom accumulation trade. I now see it as a breakout-pullback.

Stalking U.S. Steel

I am currently stalking X (US Steel), waiting for some low volume strength to get short. I'd like to enter as close to the 200 day MA as possible.

AAPL

While I am by no means bullish on AAPL, a break of $180 would provide a clue as to the stock's short term price movement.

Playing the Breakout Trading Range: IPHS

IPHS broke out in early August and is now developing a trading range between the breakout highs and lows. This has created a low risk set up. I would like to buy on a pullback to the $33-35 range with a target of $40 and a stop around $31-32.

Overall, the stock shows a nice volume pattern, stochastics are oversold and we have a nice uptrend in place. The only concern is the negative RSI divergence. This may set the stock up for failure on a retest of highs. Since that is the target, the breakout trading range trade still looks good.

SPY Trade Analysis

Last Monday (August 12th) I took a small SPY short position based on a "failed breakout" scenario, above $131 (I actually used SDS--the inverse ETF). It's now trading at $126.69. Below is what I wrote to my trade report members. It explains not only the setup, but the thought process and trade management strategy that went into the trade:

Price action in the SPY crossed a major hurdle by closing above the 50 day moving average today. The key now is to see if this level will hold. I still expect a pullback, and actually went short today at the close. Very small position. There is absolutely no setup that I trade that told me to go short today. I can't remember the last time I took a short position when a stock crossed above the 50 day moving average. This trade was based on a hunch and some "risk strategy".. I have a feeling that the market will not be able to sustain this upmove without a pullback.

Many of you are probably thinking this is a dumb trade. I won't argue with you, but let me explain my reasoning using poker.

This weekend I was at a table with 5 other players. All five players had called a $12 bet, and I was the "big blind". If you don't play poker, don't worry about what that means. All you need to know is I needed to put $6 into a pot that was had already built up to $60. Thus, my pot odds were 10:1.

I did not have a great hand. I was holding pocket 9s (two nines). Considering everybody was playing, at least a few players were likely holding a card higher than 9, and the upcoming community cards would likely have at least one card higher than nine, there was a good chance I would lose the hand. However, there was an eight percent chance that one of the community cards would be a 9. That would give me a set, which is a strong hand that I would likely win. Chances are also good that if a 9 did come on the flop, I could sucker at least one or two players with a higher two pair into betting more money that they would inevitably lose.

Let's say whenever a 9 comes I can figure on winning an average pot of $120. Using the 8 percent chance, I will win $960 every 8 out of 100 times this happens. I will lose a total of $552 total in the other 92 hands for a total gain of $408 over 100 hands with pocket 9s. I know some of the poker buffs will argue with my $120 figure--I'm going by my own experience and ability to read opponents and disguise my own hand.

An aside for the poker fans: What actually happened was a miracle . . .a 9 did come down on the flop, and so did an king (and no flush or straight draws). The guy with the king went all in, $230 and I called. I ended up winning a $300+ pot (excluding my own contributions), based off an initial risk of $6 that allowed me to see the flop.

Now can you see where I'm going with the SPY short trade? There is a good chance I will lose with the trade. I know this going in. Based on my stop placement and position size (200 shares) I am risking very little just to see what happens. I have placed my stop around $132 (I am actually using SDS to short, so $132 and 200 shares are is not exact figures).

Now if we get a failed breakout (SPY breaks back down below the 50 day MA), I think there is a good chance of a retest of lows ($120-122). Let's say I place my target above that at $122. I have risked $230 with the chance to "win" almost $2000. I can get stopped out 9 out of 10 times, as long as one of the trades reaches my target, and still break even.

See the logic? There is a method to my madness. I'll take looking bad for a trade or two (or 8), as long as in the long run it makes me money.



There were a few days that I thought about getting out of the trade (when SPY remounted the 50 day ma), but decided to stick with my original analysis and stop. Spy has now convincingly broke down below the short term trendline and 50 day ma.



This might mark another decent entry point, as I would not be surprised to see more downside near term. Here is what I wrote about SPY in last night's trade report:

The early "failed breakout" short play in SPY that I took on last week is still in play. Price closed just below the 50 day ma, but not enough to get really excited. If SPY closes tomorrow below the trendline in the chart below, I expect we'll see lower prices.

If not already in the SPY short trade, I still feel there are only two places to enter short. Either on a break below the trendline and 50 day ma, or a rise to the 200 day ma (see yesterday's report)



Finally, here is the SPY discussion from Monday's report, which setup the short scenario in more detail:

I noted early last week that the SPY presented a low risk short play. Remember that low risk does not mean high probability. Risk is only a measure of what you could lose versus what you can gain. I also laid out how I take on many low risk trades, lose out on some with small losses, but will have a few big gains that more than make up for the losses.

While SPY the low risk short has not officially turned into a loss yet, it has mounted the 50 day and Friday held up above that support level. The stop is above the recent high of $132, so the possibility of the failed breakout trade working out still exists, but there is not doubt the bottoming pattern is still in play. While I will stay with this trade until the stop is hit, I would not recommend initiating another SPY short just yet.

However, I am not likely to go long either. Volume on this upswinging bottom play is not the type that propels price dynamically higher. This could be a result of options week, but still, I don't like entering longs if volume does not confirm price.

If you are looking at an opportune time to short SPY again, there are two low risk entries.

1) If price again breaks down below the 50 day ma. The low volume makes this a decent possibility.

2) On a low volume rise to the 200 day ma, in the 135-137 range. This presents a great short on two different time frames. We already know the daily like the back of our hands, so let's flip down to the weekly chart.

Daily



Weekly:
The first thing that jumps out is the head and shoulders top formation. During the top formation, RSI has down trended and volume has shown a great amount of distribution (selling). Now, price is pulling back up towards the neckline of the head and shoulders formation, which should act as support. This is a good, low risk area to place a short trade. Add to that that this level is also right around where the downtrending 50 week ma is hoverning (138), and is also the same area where the daily 200 day ma is located (136)--well, talk about a great short setup.



It will take time and patience for this trade to setup, but keep on the lookout. In the meantime, watch for a breakdown of the daily 50 ma, and focus on trading setups.

No new sectors that we have not already discussed jumped out at me, so I'm going to go straight to the watchlist. Lots of stocks setting up. This week we have over 60 that we will focus on.

Whew . . .it's been an exciting trade with many ups and downs. This is a good example of how important it is to stick with your trade until your stop or target is hit.

Trade Entry: VISN

I bought 400 shares of VISN at $18.38.

This stock was highlighted in today's trade report, with a buypoint in the $18-19 range.

The Setup: Breakout pullback . Volume pattern is solid. Stock is pulling back from recent highs and seems to be showing strength at moving average support. The pullback has been somewhat volatile. However, strong volume pattern still makes this setup attractive.

Risk: Stop can be places under the 50 day ma or the bottom of Friday's support confirmation bar. Target is the recent high, in the $24-26 range.

Trade Entry: SAFM

I took a small 1/4 size pilot position in SAFM today, buying 100 shares at $43.29. This stock was highlighted in the trade report, with a buypoint in the $42-34 range.

The Setup: Breakout pullback following a strong bottoming formation. Volume pattern is solid. Stock is pulling back at recent highs. I expect a pullback to the bottom of the breakout bar, around $42. It's also possible that healthy pullback could reach the 50 MA, at $40.50. For this reason, I took a small probing position with the expectation that there could be more of a pullback. If the pullback is orderly and on low volume, I will buy more at the mentioned support levels.

Risk: Stop is under the 50 day MA with a target at old highs, around $50.

Trade Entry: UTHR

Entered long 100 shares of UTHR at $108.29.

Setup: Breakout-Pullback. The stock pulled back to the bottom of the breakout bar before confirming support today. The recent trend is higher highs and lower lows. Buying pullbacks has been lucrative. Nice volume pattern.

Risk: My stop is under the tail of today's candle, at $105. the intial target is the recent high at $117.

Concerns: Large down volume two days ago, the stock closed only a little off highs. Would have liked to have seen more volume today.

A Blast From the Past

I like the breakout-pullback setup in FFIV, one of my favorite momo stocks from what now seems like ages ago. Stock broke out over resistance, there's a nice volume pattern and money seems to rotating into select tech stocks.

The fact that the recent breakout was not on heavier volume leads me to believe there will be a pullback. I see to buy areas. First, the support area marked in the chart below, in the $32.50-34 range. However, if the market pulls back as well, I wouldn't be surprised to see a deeper pullback to the 50 day MA, $30.85.

Trade Entry: POT

In last night's Trade Report, I highlighted commodities as an oversold bounce setup. I used POT as my primary example and entered today based on last night's analysis.

I bought 300 shares of POT at the open at $176.31.

Setup: Oversold bounce setup, within a longer term topping pattern. Stochastics are oversold and the stock bounced off strong support.

Risk: My intial stop is under the 200 day moving average. My target is not as precise. The intial target is $195, just under the breakdown bar. However, we could see a move up to $215, around the 50 day moving average. I will likely take partial profits as each target is hit and move my stop up.

Concerns: Downtrending stock and sector. Volume could have been higher today.

Trade Update: JRCC

I took a small short position today in JRCC. The stock has been in a strong topping downtrend and has pulled back up to the 50 day MA. Stochastics are near overbought levels and volume has been average on the pullback. This is a low risk entry with stop placed just above the 50 day MA.