Swing Trading: Will the Fall Bring a Bull Market or Another Black Swan?
Short-covering and the end of the month effect continue to exert a bullish bias on prices on the final trading days of August. Combine that with the light volumes ahead of a long holiday weekend and you have the recipe for a strong market move – in this case, a move higher.
With traders re-evaluating “deeply held convictions” from when the consensus was that the world was coming to an end, model-driven traders should also take the time to re-examine their risk management strategies in the wake of the market’s recent downturn.
Did you have a diversity of strategies to take advantage of the move down and the move up?
Did you have the ability to partially or fully hedge your portfolio against risk (for example, over the past weekend after the Ben Bernanke speech)?
Do you know what you’ll do the next time a Black Swan Event arrives?
If these are the kind of questions that you think are worth having answers to, then watch the video with Larry Connors, CEO and founder of TradingMarkets.com and Connors Research, at the link below. Whether the fall of 2011 brings us a bull market or another Black Swan, knowing what to do before it’s time to do it is critical to your survival and success as a trader.
Larry Connors Presents: The 4 Keys To Swing Trading and Risk Management
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The stock market is set to open in overbought territory on Wednesday as strong performances by stocks like ^S^ and ^AMZN^ were accompanied by buying in industrials like ^CAT^ and Boeing (more on Boeing below).
Closing higher for a third day in a row and overbought below the 200-day moving average as of Tuesday’s close were shares of manufacturer ^JOYG^. The company is scheduled to announce quarterly earnings on Wednesday.
Here are 7 Stocks You Need to Know for Wednesday.
Up three days in a row and gaining more than 2% ahead of trading on Wednesday were shares of ^BA^. The stock has finished in overbought territory for the past two days in a row. Also closing for a second day in overbought territory below the 200-day were fellow defense/aerospace stocks ^COL^ and ^GD^.
Shares of ^NFLX^ rallied to close back above their 200-day moving average on Tuesday. The stock gained 5% on the day and is likely to open overbought when trading begins on Wednesday.
New to Swing Trading? Read our primer, What is Swing Trading? .
With any additional strength on Wednesday, shares of ^DRI^ will also be back above their 200-day moving average. Home of Olive Garden and Red Lobster, DRI has closed higher for three days in a row, gaining more than 1% in Tuesday’s session.
Fellow restaurateurs ^CMG^ are also up three in a row. Trading above its 200-day moving average, Chipotle is set to open overbought Wednesday morning.
^RIMM^ has closed for a second day in a row in overbought territory below the 200-day moving average. Up well over 5% on Tuesday, the stock is trading at its highest level since mid-June.
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David Penn is Editor in Chief of TradingMarkets.com