Trading Strategies Working in a Volatile Market
Ahead of the election results, the market went sideways on very low volume. Afterwards, however, the major indices gapped much higher and then trended higher for the rest of the day.
We saw several stocks crush earnings and meet nearly all the requirements in our earnings eruptions strategy that week. These stocks did not have quite enough volume for a large position but nearly all reached the first target taught in our earnings trading strategy if they reached the technical entry point.
That Wednesday, though, we had TWLO come up on our radar as meeting all the requirements in the earnings eruptions strategy after a big beat and raise.
TWLO reached the entry point and then crushed it. It soared 17% from the technical entry point in just over 24 hours. The price made a huge move while pulling back less than 1% below the entry point taught in the earnings eruptions strategy.
Our philosophy is to trade big position sizes only with stocks that meet all the requirements in a strategy proven to have a very high win rate while using a tight stop-loss. And only be aggressive on those with a lot of upside as well.
That is the best way for a retail trader to build their account. Wait for the best opportunities that often only come up a few times a month. In fact, its probably best to skip everything else that comes up on your radar.
The stocks and earnings reports that meet the requirements in the earnings eruptions strategy continue to win big. GOOS was another nice winner last week for those using the earnings eruptions strategy.
Surprisingly, high tight flag breakouts continue to score big as well given the recent large correction.
Yesterday we saw NGVC break out of a high, tight flag. The average volume was a little lower than we would like to see but it still made a huge move. NGVC soared about 15% from the entry point taught in the high, tight flag course within 4 hours.
Although the lower average volume may lead to a lower win rate, it still is worth a shot to us now after seeing YGYI and PYX make enormous moves out of this pattern in a heartbeat. Those using the rules in the course would have scored big as both went parabolic quickly which triggered an exit at around a 30% profit or more for a large portion of the trading position.
Meanwhile, the volatility and choppy market action makes longer-term swing trading difficult for now. A lot of our recent long-term swing trading setups have not reached the technical entry point. The only ones working are those in defensive industries like grocers, discount retailers.
But that may be about to change. We are seeing technical signs that the market is about to rebound while volatility gradually subsides. This could be a good time to find a great swing trading opportunity for the weeks ahead. A time when the market historically rallies.
Stay tuned and get ready with your favorite stocks and strategy. The best earnings reports with a guidance raise are a good place to start your search.