Look For Higher Prices
When looking for swing trades, I like to look at higher priced stocks for
potential candidates. Why? Because they have the potential to make larger point
moves as a percentage of their price than lower priced ones. Wednesday’s example
of an alert in Alliant Techsystems
(
ATK |
Quote |
Chart |
News |
PowerRating) gives us a good look at that.
Â
12:11:56
Alliant Techsystems (ATK)
is pulling back to the 20-day moving average. ATK is currently trading down
up 0.61 at 108.12 and is holding a
3-month relative strength rank of 80 with an uptrending
ADX of 40 from TradingMarkets.com.
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The reasons behind the higher priced stocks getting the nod over
those that are lower is simple. For ATK to move 5 points requires less than a 5%
move in the stock. For a $5 stock to move the same amount requires a move of
100%! How many times have you doubled your money on a stock? If you are one of
the luckiest of us, the amount of times can probably be counted on one hand.
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However, ATK is up nearly 6 points at the time this is being
written – a move of around 5.5%. This is not to say you need to trade $100
stocks exclusively, but I recommend a cut off price of $20, with higher prices
being better.
Until tomorrow,
Duke