How to Swing Trade an AI Super Stock (2023)
Swing Trading AI Super Stocks
The upgrades to the service will include stocks with the characteristics that lead to some of the biggest market moves. So lets talk about the most profitable stocks to swing trade.
They are fondly referred to as super stocks.
Little Known AI Stock
So far 2023 is the year of artificial intelligence stocks and it continues to be so in July. Everyone has heard of NVDIA but today lets go over an AI super stock seemingly running under the radar this year and handily beating NVDA.
We want to study this so we can identify other chart patterns that will surely come up in this or other AI stocks later this year.
Swing Trading AI Stocks. Step 1 – Find a Great Long-term Trend
Most years we find a few great growth names forming a very bullish pattern early in the year. In 2019 it was ROKU which formed a high tight flag in January before a massive run. In 2020 it was TSLA that formed the same pattern and broke out before exploding nearly 1,000% in about a year.
This year we featured SMCI in the alert service in January and we will go over the different swing trading technical entry points on this super stock and the characteristics to look for. SMCI is an AI stock that has already tripled from our initial technical entry point in 2023.
The first thing we look to find these super stocks is good growth and long-term trend in a red hot industry. AI and high performance computing were emerging early in the year as that new leadership after a tech bear market in 2022.
Lets go over the first technical entry point on SMCI to understand how a top performer looks before a potential life-changing run.
Swing Trading AI Stocks. Step 2 – Find either a high tight flag or at least a 5 week bullish consolidation pattern
Here is the chart as it appeared in the alert service in January as it was consolidating within a long-term uptrend.
Charts courtesy of StockCharts.com
SMCI is an AI stock that was in a long-term uptrend since April of last year. As the market was making lower lows in October, SMCI was forming higher lows and confirming its long-term uptrend even in 2022. A good sign.
When we featured it to customers in January of 2023, the company had already beat earnings estimates by a wide margin the prior 3 quarters. Not by a few pennies but by 66 cents per share and 88 cents per share with the beats getting larger each quarter. Another good sign.
Sales grew strongly in fiscal 2022 (ending in June of last year) showing the fundamental strength of the business. They were profitable and had just pre-announced another large earnings beat when we featured it. The overall market had generated a bullish market signal as well.
Swing Trading AI Stocks. Step 3 – Identify an Ideal Technical Entry and Stop
On the chart above you can see how the price was rejecting $88 a share consistently and not able to close above it. That was our technical signal which roughly corresponds with a close above a line connecting the highs in the consolidation. So we were waiting for a close above $88.
One thing that the biggest winners tend to have in common is that they tend to hold a tight stop-loss below a good technical entry point. Once the price closed above $88, it held a 3.5% tight stop-loss. The high tight flag that we featured in early May held an even tighter stop-loss.
ROKU did the same thing in 2019 and so did TSLA in 2020. This offers the opportunity to take a shot with a larger position size with a real tight stop-loss similar to the high tight flag strategy we developed which is one of our favorites.
If you just buy and hope at anytime, you are likely to be down 10% or more at some point. If a recession or other bad news hits, it will drop further and you will be out of luck. This is why we look for the ideal technical entry points with fresh news that is positive.
Here is the chart featured to customers the next time we featured it just before it doubled in a few weeks.
Charts courtesy of StockCharts.com
In this case, the company missed estimates after hours on May 2nd but bottlenecks in supply chains were now resolved and the outlook was much better. Here is one of the best moves of the year in the AI industry in May.
In May, the stock soared out of multiple high tight flags after featuring it in the daily alert just before the move started in early May. It moved over 120% in just a few weeks while holding a tight stop out of each high tight flag.
Charts courtesy of StockCharts.com
You often get a well-formed consolidation pattern after a big initial move on a super stock. This was the case again when we featured it for a third time in June to customers of the daily alert for those who enjoy technical swing trading.
Swing Trading AI Stocks. Step 4 – Keep it on Your Radar and Spot More Ideal Entries
Notice the fairly uniform downtrend in the flag portion of the high tight flag above. A close above the downtrend resistance in the flag, or pennant in this case, followed by a move above that days high the next day was a good entry trigger in a high tight flag pattern.
Here is the move its made since.
Charts courtesy of StockCharts.com
A stock like this could easily make the lions share of your swing trading profits in a given year. One great entry point after another as the AI leadership continues. The chart patterns and technical analysis allow us to get in at ideal entry points with a tight stop to minimize risk with great upside potential.
The 3 Stocks to Wealth service will now include videos going over stocks with the same explosive earnings beats and guidance raise on good growth stocks generally each week during earnings season. Some of these will start a long run from there. A stop below the long-term trend line explained in the videos on investtobefree.com allows us to keep a core position while swing trading these ideal technical setups.
Swing Trading Super Stocks. Step 5 – Fill Your Watch List with More Great Stocks to Trade
This video goes over an example of the hallmarks of a super stock to have on your watch list and goes over the various entry points and swing trading tactics in more detail. We also discuss how to trade around a core position.
Our top trading opportunities for the weeks ahead
