Swing Trading and Jackson Hole
In the last blog post we talked about how PAY was surging after reaching a good technical entry point near the support in a long-term upward sloping channel. Since then, the stock surged another 12% higher and is now forming a strong earnings flag as the market pulls back.
After the Jackson Hole speech today where the Fed was a little more dovish than expected, PAY is now breaking out again.
ALAB, an earnings flag featured in the Weekly Alert a couple weeks ago, quickly reached the first profit target taught in the rapid account growth course. LRN, featured with ALAB, also made a nice initial surge out of an earnings flag to reach that first 7% to 10% profit range. ALAB has pulled back now while LRN is breaking out of another strong flag pattern.
Unfortunately, we recently got a PPI inflation number that was more than 4 times the expectation of .2% month over month. And the payroll numbers were revised significantly lower earlier this month. This is leading to some increased risks associated with the numbers due out later this month and early next month ahead of the September Fed meeting.
Some Lessons Learned During Our New 1 Week Boot Camp
In our new one week trading boot camp, we found several stocks that made big moves after reaching the entry point in our earnings breakout and high tight flag strategy.
We saw first hand how a stock that met the rules in the #1 strategy taught in the rapid account growth course pre-market reached the entry point and surged nearly 20% from there the same day while holding a very tight stop below the entry signal taught in the course.
Students witnessed how the stock hit the parabolic strategy within a couple days for a nearly 30% profit for those shares kept after the first profit target was reached. The ideal exit strategy taught in the course worked beautifully. Another stock soared 19% from the entry trigger price in the earnings breakout strategy.
Although one had some overhead resistance and the other had a great daily chart but poor post earnings history, they both were big winners for those who took the trade after we pointed them out pre-market before they reached the entry trigger. Along with each setups pros and cons.
And both held a 1.5% stop below the ideal technical entry point after reaching it which is critical when trading.
To manage our risk, we need stocks to hold a tight stop-loss with a good chance at a big move higher. Otherwise, trading can be a tough game to win. Once you are down 15% or more, the stock may come back. And it may not.
You want to be in a winning position right away when trading and be able to take some profits quickly while letting the rest ride while stopping near your entry. Not sitting on a big loss hoping the stock will come back. This is one of the reasons we look for ideal high tight flag and earnings breakouts when they develop and meet all of our rules pre-market.
Again, the 80% of high tight flag breakouts that do not meet the course rules should be avoided – especially this time of year.
The boot camp made the rules crystal clear and we got to see some that met the rules make big moves while holding a very tight stop in real time.
Catching a Big Winner in August
Investors seem to be very focused on margins and earnings beats right now. During the swing trading boot camp, all the big winners seemed to have the same thing in common. They all reached the entry point after a huge earnings beat.
Not a 1 cent beat or 3 cent beat per share. No, in many cases we are talking about a doubling of their earnings expectations.
So the 2nd tier and third tier opportunities are more hit or miss while the ideal high tight flag breakouts are still hitting the first profit target with a high win rate. This is especially true in the ideal price range taught in the rapid account growth course. But the catalyst has to be strong right now.
Suddenly the nuances of trade selection in the course are extremely important. For instance, AMPX a couple weeks ago did not meet the consolidation rules taught in the course while another one met all the rules.
The one that met the rules hit the profit target right away while AMPX did not make it to the profit target before hitting the stop. We are seeing this over and over the past few weeks. The ones that meet all the rules pre-market in the ideal price range are worth trading while the ones that do not meet our rules pre-market are not.
So stick with your #1 strategy in the ideal price ranges and industries and be skeptical of everything else right now. Also, be sure to make it automatic with OCO orders (which includes a limit order) and stop-loss orders with a portion of your position. And be sure to raise the stop on the remainder right away after the first profit target is reached.
Another key is to avoid lower priced stocks in general right now – especially starting a few days before a Fed meeting and before key inflation data is due to be released.
Swing Trading after Jackson Hole
A lot of the best stocks that get off to a slow start will set up great earnings flags and other bullish technical patterns in late August.
The last couple weeks of August tend to be very good for swing trading these patterns if you look for the ones that hold up best earlier in the month after a big earnings gap. As long as the market holds up OK next week and into early September.
So one approach is to just wait and get a list of the best earnings flags setting up. And then look for a good entry later in the month.
We will have some great ones ahead in the daily alert service.
Next Week Could be Big
The great reaction to the Jackson Hole speech today also led to a lower 10 year yield. One of our top setups featured earlier this week in the daily alert was TREE. The stock reached the entry trigger soon after the speech text was released and the stock has nearly reached the first profit target taught in the rapid account growth course where you can wrap up a nice 1 day profit.
We mentioned the bottoming bases on some homebuilders several weeks ago and TMHC is surging higher again along with TOL. Lets see what kind of follow-through we see next week from these. Often you get a big jump in the probabilities for rate cuts after news like this followed by a reversion to lower probabilities soon after.
The PCE numbers next week and the payroll report the following week will be key. Especially with a lot more volume coming in after the Labor Day holiday. A time where we usually see volume ramp up for better follow-through on breakouts.
In the 1 week trading boot camp we talked about a few stocks pre-market that later made a huge move that day from the technical entry point taught in the courses. In the following video we talk about what we look for in ideal trades and when to trade, and just as importantly, when not to.
Gaining Confidence to Quickly Build Your Account Swing Trading
The Pros and Cons of Breakout Trading
The Best Trades for the End of August and early September
