When traders focus on technical analysis looking to confirm short-term moves in the market or for a particular company, in essence they are swing trading. One the more popular methods of stock trading, it is important to understand what in today`s financial markets what can impact the current direction of a stock for its seemingly normal rhythm.
Developing a routine that views a stock charts technical trend and looks to confirm momentum breakouts or trend support is a learned skill and requires time-tested seasoning. This approach also needs to consider other potential impacts that could ultimately alter a stock’s current trajectory.
The market declines of 2008 revealed the importance in building market sentiment as a precursor that can impact a stock’s current trend. The overall investing moods of the collective community can override a stocks seemingly predicative trend and needs to be considered prior to any short term position. Utilizing the Dow Jones or the S&P500 indexes as a market barometer is a typical method to assist in determining the overall market sentiment from a technical view. When identifying overall market support and resistance in conjunction with the appropriate technical indicators it becomes apparent with the trained eye if a market’s direction looks to change from its current trend. Seasoned traders will also consider the overall market volatility utilizing the VIX CBOE as an indication of potential extreme market moves.
Swing Trading also requires an awareness of some of the more relevant global events found to be impacting investor moods and often during extremely highly volatile periods it is important to be connected to the pre-market futures and how markets on the other side of the global are interpreting high-profile events. Rest assure that any time governments are intervening on any event that the politics has a tendency to create a rollercoaster effect in the markets.
When looking at a potential stock position other impacts to consider are upcoming quarterly or annual corporate earnings. In fact, it is highly recommended to stay clear of a short term position if an earnings release is to happen anytime within the next 10 business days. It is not only the stocks corporate earnings date that needs to be confirmed but also any bell-weather companies earnings dates could also impact your stocks ability to continue its current trend. Examples of a bell-weather company would be Apple or HP for the IT sector or General Motors for Automotive. The easiest way to determine this relationship is when a stock is viewed in Google or Yahoo Finance, associated companies are also featured that coincide with a stocks sector.
These are just some of the variables to consider when analyzing stock opportunities and reflect a single component to being a successful swing trader. At IdealTradingLifestyle our market trading experts have developed these lessons-learned and make this a part of their everyday strategy to providing clients with a unique and time-tested solution to trading profitably in these changing markets. To find out more about these and other key trading strategies, please refer to www.idealtradinglifestyle.com.
To find out more about how IdealTradingLifestyle fits into your day and how to take action to self-directing all or a portion of your personal financial portfolio, contact us direct at 1.888.942.0266 ext 01 or email direct to sales@idealtradinglifestyle.com.
Article by: Randy McMullin – MBA, ITM
