What a Home Run Swing Trading Opportunity Looks Like

 

Earlier this year we featured one of our favorite swing trading opportunities for the current market.  The stock was PLMR.

 

Despite signs of a correction looming and tariff policy change driven sell offs, this stock continued to march higher overall while holding a tight stop-loss.  It was a good match for the current market conditions given the continued insurance bull market and tariff uncertainty.

 

Now that much of the tax policy, government spending and tariff uncertainty fog is lifting, you want to get ready for the home run swing trading opportunities in the months ahead.  Sure, we could have more tariff turmoil in the weeks ahead, but a test of the April lows should also present some amazing opportunities.

 

So its a good time to learn what a home run swing trading opportunity looks like from a fundamental and technical perspective.

 

Curious Over CURI

 

Lower priced stocks are generally a terrible place to look for home run swing trading opportunities.  We talk about this in length in prior blog posts.  The win rate tends to be significantly lower and other risks emerge that we just do not see on higher quality growth stocks.

 

However, there are a few diamonds in the rough that are worth a shot in the lower price ranges.  And these often wind up in the daily alert for customers.

 

Normally, stocks under $10 are stocks where the wheels have fallen off the bus over time.  Good stocks do not go public under $20 normally so things have not gone well since the company went public if the stock is under $10.  (One exception to this is during a significant recession and bear market).

 

So the first thing we want to check is the long-term trend of the stock.  Has the stock been in an uptrend (higher swing lows and higher swing highs over at least several months) with a rising 200 day moving average?

 

If not, we usually just move on.

 

Occasionally, you get one that has a long-term uptrend firmly established.

 

On even rarer occasions, you get one with strong growth and a reasonable valuation.  A special bonus is a stock that is even paying a nice dividend yield.

 

The Technical Signs of a Potential Home Run Swing Trade

 

So CURI looked like this on a chart.  I can scan through hundreds of charts in minutes to find something that is worth researching in this lower price range.  Without strong technicals and uptrend already established, my experience tells me to stay away in this price range.  Especially if its an ADR.

 

Charts courtesy of StockCharts.com

 

Here is how CURI looks on a daily chart.  It came up on our screens because we are only looking for good growth stocks and/or stocks with rising earnings estimates.  Or stocks right after a blowout earnings report.

 

Notice how the stock is breaking out of a long base into 52-week highs.  One of the things that Cramer always mentions is that the new high list is where you want to start your screening.

 

Great traders will also tell you that the best stocks to trade are near highs.  Not lows.  Some stocks will go higher over the long-term.  A lot of them will just keep going lower.

 

After the stock breaks out of the consolidation in April, it forms an ascending base pattern.  Another good sign.  Volatility in the ascending base was contracting over time which is also bullish.  It also formed a high tight flag – the most bullish pattern.

 

So far so good after analyzing the chart.

 

The Fundamental Signs of a Potential Home Run Swing Trade

 

When we took a look at the financials, we saw that they were profitable in their most recent earnings report (a nice plus) and had a nice beat on the top and bottom line.  Sales growth was around 25%.  Fine.

 

They also doubled their dividend to 10 cents per quarter.  Even better in a more volatile market that has been rewarding growth stocks with better valuations.  They also have a growing AI licensing business.

 

Similar businesses like NFLX and SPOT were acting well out of good consolidation patterns.  Another for the plus column.  And cash flow grew strongly year-over-year.

 

The forward dividend yield is now 4.69%.  More than the 10 year treasury yield.

 

The Entry Points

 

A move above the ascending base pattern on the earnings news was a good entry point.  Another was the high tight flag breakout which we caught for customers after it held up nicely in a very bullish formation after earnings and volatility subsided.

 

After reaching the technical entry point listed in the daily alert, it moved 30% higher in less than 3 weeks while the S&P 500 is up about 1%.  The stock continues to form bullish patterns but we already took some profits and raised the stop on the remainder to ensure a nice profit while letting the rest run.  Until it stops trending basically.

 

 

Those using the parabolic exit strategy taught in the rapid account growth course already cashed in a big profit in about 2 weeks.

 

Either way, its critical to get a good technical entry point where a tight stop-loss tends to work.  A good way to fail when swing trading is to let your losses run.  Or turn a trade into an investment when things are not going well in the trade.  Especially on these lower priced stocks.

 

A Better Home Run Trade?

 

The problem with CURI is that its very speculative and they are spending less on content creation which may not be a great sign unless the AI licensing business continues to take off.  Its a lower priced stock which inherently means the chance of long-term success is lower in almost all cases.

 

Tonight we will be revealing another stock that could soar in the weeks ahead.  The same stock mentioned on August 12th last year in the closing comments in the daily alert just before it doubled within a few weeks while holding a very tight stop.  The technical pattern?  A high tight flag, of course.

 

In the next blog post we will cover another ideal swing trading opportunity mentioned in May in the daily alert just before it nearly doubled within a few weeks.   Its a similar scenario where the stock forms multiple bullish patterns within a long-term uptrend.  The stock reached a good technical entry point after a strong earnings report as well.

 

Its another great trade to learn from.

 

The growth characteristics on this one are off the charts.  We will go over the pros and cons of this trade and a good secondary entry point.

 

This next one could double or triple.  Similar to what PLTR and APP did quickly right after we featured them late last year in the daily alert.

 

Stay tuned and have your watch lists ready for the months ahead.  Things could get really good.

 

 

 

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