Our Perfect Trading Setup
This is the ideal trading setup we look for in our newsletter and in our personal trading when we apply best-of-breed fundamental and technical analysis. When we wrote our first trading book on our swing trading style back in 2004, we gave an example of this setup found on the day we wrote that section of the book. On the chart below you can see the long-term, consistent uptrend in the stock with the well-formed consolidations we talk about in our newsletter. Key characteristics to look for when applying technical analysis. Volume was building as the price was breaking its downtrend.
A couple months later after our swing trading book was published, we looked back and found that the stock had made a huge move to the upside. The first time we had checked the stocks performance since putting the trading setup into the book before it made its move. It was the perfect swing trade. The kind of swing trading opportunity and chart pattern that gets us excited every time we see it. If you like to make money in the market trading stocks, this is a great setup that continues to work well.
Below is another classic swing trading setup published in our Daily Alert newsletter on February 3rd, 2010. At the time this was one of the top Chinese growth stocks in the market. Although the Chinese government had raised rates and bank reserve requirements, the market reaction was harsh, setting up this opportunity.
This stock had proven huge sales and earnings growth, a high return on equity and several other characteristics establishing it as one of the premiere growth stocks at the time. And our technical analysis showed that this was just about the perfect stock to trade. A strong long-term uptrend, a well-formed pullback had taken the stock back to its uptrend support, and key technical metrics were moving out of oversold levels without the uptrend being broken. It was a perfect entry point for this stock in an uptrend channel. The stock was featured in our Daily Alert newsletter on February 3rd before the stock doubled in price in about a month!