Tuesday, October 5, 2010

Get long now!

If you are a swing trader you had better be looking to add to, add back to or get into long swing positions into the close of trade and early tomorrow if you have not done so already!

Although the markets have begun to show signs of underlying weakness in the intermediate term uptrend the uptrend is still alive and kicking and those stocks which have not broken down as yet will likely have at least one more up leg!

Here are a few buy suggestions that still offer good risk/reward swing trades from my watch lists:

Based on research, I have classified CHTP, DRYS, and FTNT as speculative longs because although they have experienced an EP recently they have not met enough of the fundamental criteria to be classified as quality long and although they are potentially more explosive they are also riskier than quality longs. So on these I would risk no more than 1% of my account on each.

RAX, LOGM, OPEN, VPG and ARUN are quality longs because they meet roughly 70% of the fundamental criteria that indicate high probability of out performance (EPS growth, Sales growth, Medium term momentum, Low float etc...). This means that trades in these stocks, in this case swing trades, qualify for 2% - 3% risk on a trade. With OPEN, LOGM and VPG meet more than 80% of the criteria so one can risk up to 3% on these. With RAX and ARUN risk can be as high as 2.5% per trade. In addition, one should give preference to trades in terms of the quality. So give priority to higher quality stocks for your portfolio as they trigger. So if for instance, LOGM and RAX are at buy points and you only have space for one more trade then take LOGM instead of RAX.

Also CHTP, DRYS, FTNT, RAX, LOGM, OPEN and ARUN are buyable right now with stop loss below swing lows or significant moving average like 10 SMA or 20 SMA. With DRYS and VPG one may want to wait until an entry signal is triggered like trading above the previous day's high in DRYS and trading above resistance in VPG.

Please note these are not buy recommendations and are merely my thoughts on how I would be looking to navigate the current market environment posted here for entertainment purposes only!

Good luck and good trading!

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