Swing Trading and the Waiting Game
Will stocks dare to rally for a third consecutive session? How much can buyers make up for Monday’s meltdown?
These are the questions that are on the minds of traders going into the final two days of trading for the week. Traders with bullish sentiments note that the Dow industrials, for example, have closed higher for seven out of the past eight days.
The problem? Traders with bearish sentiments are saying the same thing.
Our approach will remain the same. Rather that focus on bullishness or bearishness, per se, we’ll stick to buying high Short Term PowerRatings stocks and exchange-traded funds. What attracts us as stock traders and ETF traders is temporary weakness in otherwise strong stocks and funds, a temporary weakness that is flagged by our Short Term PowerRatings. This weakness is a critical edge in short term stock and ETF trading, allowing traders to buy when stocks and ETFs are languishing on the shelves, and to sell when potential buyers are lined up around the block ready to buy those very same stocks and exchange-traded funds.
Right now the markets are in a more or less neutral mode, with stocks and ETFs neither very overbought nor very oversold. This could change very quickly, especially if buying pressure remains — or increases. But for now, there are very few quality opportunities for swing traders — though I am starting to see more and more short or inverse ETFs move into oversold territory.
As we have learned each time we have focused on the short or inverse ETFs, there’s no reason to rush. If the markets become overbought, the right ETFs will begin to earn the sort of Short Term PowerRatings of 8, 9 and 10 that always merit our attention as traders and there will be plenty of opportunity to act.
According to a recent report, eight out of ten securities traded are exchange-traded funds. Want to learn how to trade them? Click here to find out what traders are saying about Larry Connors’ new book, Short Term Trading Strategies That Work: A Quanitified Guide to Trading Stocks and ETFs!