Top swing trading stock & ETF picks with Morpheus Trading Group (MTG)

[morpheustrading]

How To Find Top-Ranked Stock Breakouts In US, Canada, Germany, or India

In this stock trading strategy video, we use our new swing trading stock screener to show you how to identify the top-ranked stock breakout candidates of the US, Canadian, German, or Indian stock markets in 30 minutes or less every day.

Specifically, we show you the power and simplicity of our preset “potential breakout scan” that enables short-term traders to scan for the stocks that automatically meet the following technical analysis criteria:

• Stock is showing a high relative strength (RS) ranking (our propriety indicator that compares individual stock performance versus the broad market over the past 6 to 12 months)
• Stock is trading not more than 20% below its 52-week high
• Stock is trading above its 50-day moving average
• The 50-day moving average is above the 200-day moving average

Stocks that meet all the technical trading requirements above are stocks with a high likelihood of breaking out to new highs within the next week or two (assuming the overall broad market remains healthy). Actual stock picks highlighted in this video as current potential breakouts include the following ticker symbols: $SPF, $SWI, and $VAC.

In this trading education video, we also show you how to quickly and easily export the list of the best stock breakout candidates to Excel or CSV format, so that data can be imported into your own stock trading software.

To view this 4-minute video (on our YouTube channel), press the “play” button on the window below. For best quality, be sure to watch in full-screen and HD mode (720p) by clicking the icons on bottom right of video player window:

How To Find Top-Ranked Stock Breakouts In US, Canada, Germany, or India - Video

Still in beta mode for at least a few more weeks, the MTG Stock Screener is presently free for anyone to use, and no website registration is required.

Since the stock scanner is web-based software, there is nothing to download. You can even run this technical stock screener on your iPad, iPhone, or Android smart device, making it easy to do your daily stock scanning research on the go.

Enjoy and here's to a great start to 2013!

[Websman]

Your stock scanner looks to be a valuable tool. I'm going to check it out!

[morpheustrading]

Why Homebuilders SPDR Is Poised For ETF Swing Trade Entry ($XHB)

The weekly chart of SPDR S&P Homebuilders ($XHB) shows three months of tight basing action at the highs, with a false breakout in early November of 2012 that led to another nine weeks of consolidation. This is the bullish type of price action that leads to sustainable breakouts and ideal, low-risk swing trade entries. This is shown on the weekly chart of $XHB below:



Dropping down to the shorter-term daily chart interval, we also see a tight base of consolidation trading around the 50-day moving average, with two higher lows in early and late December. This is the shorter-term type of price confirmation that we like to see confirming longer-term bases of the weekly chart. The daily chart of $XHB is shown below:



The last day of 2012 proved to be quite powerful, as major averages blasted higher in what was an impressive day of accumulation. The main stock market indexes closed more than 1.5% higher across the board, with volume increasing on both the NYSE and Nasdaq by 30%. The Nasdaq Composite, which had been quite the laggard in December, closed out the year with a strong 2.0% advance, and is now back above the 50 and 200-day moving averages.

The combination of Monday’s heavy volume advance and the Nasdaq reclaiming the 50-day MA was enough to cause our stock market timing system to shift to a different mode. Regular subscribers of our swing trading newsletter should note details of the change in the beginning of today’s report.

With the new change to our stock market timing model, we want to continue building our long exposure as new, low-risk swing trade setups develop. The iShares Peru Index ($EPU) triggered a new buy entry in our ETF trading portfolio on Monday.

In addition to $XHB, there is another new ETF swing trade buy setup on today’s “official” watchlist. Several individual stock trade setups have been added to today’s watchlist as well.

[morpheustrading]

re: stock screener

Great, please do check it out and let me know what you think.

Since it is still in beta mode, we greatly value the input (both good and bad) from everyone. So, feel free to lay it on me, man!

Your stock scanner looks to be a valuable tool. I'm going to check it out!

[morpheustrading]

Why We Are Stalking Market Vectors Coal ETF For Potential Buy ($KOL)

Our nightly ETF screening did not turn up many actionable swing trade setups at the moment, which is to be expected after such a big gap up in the market. Nevertheless, we were able to find one ETF that has been consolidating in a tight range over the past few months, after breaking above a weekly downtrend line.

Market Vectors Coal ETF ($KOL) is currently forming a “base at the lows,” after undergoing a significant decline from the highs of 2011. These lower level bases can be tricky to enter, as we usually see one or more false breakouts along the way before the real breakout occurs. The recent basing at the lows is shown on the weekly chart pattern of $KOL below:



The shorter-term daily chart of $KOL below shows the 50-day MA (teal line) starting to trend higher over the past few months and the 20-day EMA has now crossed above the 50-day MA and is pointing higher. The 50-day MA is still trading below the 200-day MA, but that is to be expected on a lower level base breakout. Still, we should always see the price action above the 50-day MA before doing any buying of a base at the lows:



With this type of technical ETF trading setup, the idea is not to catch a bottom; rather, we wait for some bullish momentum to build before establishing a position. We also see higher “swing lows” forming within the base, which is a bullish sign. If the price action pauses for a day or two in the $25.30 to $26.00 area, we might be able to grab a low-risk entry point on a breakout above a two or three-day high, which would also put the price back above the 200-day MA. If this ETF meets our strict technical criteria for swing trade buy entry, regular newsletter subscribers will be notified in advance with exact trade details for the setup.

With the main stock market indexes posting back to back accumulation days (higher volume gains), the odds of the broad market staging a significant rally have increased dramatically in just a few days. Yet, the true test will come over the next two to three weeks, as we look for new ETF and stock breakouts to hold and extend higher, as new technical setups are developing. Such a constant rotation of fresh potential ETF and stock breakouts is one of the key factors we look for to confirm that a new bull market may be under way. Obviously, that hasn’t happened yet, but this at least gives you an idea of what to be looking for as a reliable indicator of whether or not recent strength in the stock market will be sustainable.

[morpheustrading]

How Market Vectors Coal ETF Has Now Become A Low-Risk Buy Entry ($KOL)

Market Vectors Coal ETF ($KOL), which we initially pointed out as a potential trend reversal buy setup in our January 3 technical commentary, continues to chop around in a sideways range since clearing resistance of its 200-day moving average on January 2. However, the ETF may now be providing us with an even lower-risk swing trade entry point than last week.

Over the past two days, $KOL has been trading below the $26.25 – $23.35 breakout pivot (the dashed horizontal line on the chart below). It has also been doing so on lighter volume, which is a positive sign. Now, we would ideally like to see the price action retrace down to its 200-day moving average and form some sort of bullish reversal candlestick pattern. If this occurs, it would subsequently provide us with a very low-risk swing trade buy entry.

The area we are looking at for potential buy trigger is somewhere between the 20-day exponential moving average (beige line) and 200-day moving average (orange line), as annotated on the daily chart of $KOL below:



Although we would prefer to enter $KOL as a pullback buy entry, a breakout entry on the next move above the horizontal pivot may be in order if the ETF continues to hold near the highs of its recent range. Zooming out to analyze the longer-term monthly chart of $KOL, the technical pattern becomes even more clear.

After moving above resistance of a downtrend line that was in place for more than a year, $KOL developed a tight base off the lows that has been in place for the past six months. As the above daily chart confirms, the ETF now appears ready to breakout above this extended range. Again, with trend reversal setups, it is crucial to first wait for an extended base to develop at the lows, in order to ensure the ETF has actually found a significant bottom, rather than trying to catch a falling knife:



Based on the follow-up technical analysis above, we are now stalking $KOL for potential buy entry in the coming days. Although we typically focus more on breakout entries and pullback entries of ETFs and individual stocks, we are not afraid to buy when the occasional trend reversal setup with an overly positive reward-risk ratio comes along. As always, regular subscribers to our swing trading newsletter will be notified beforehand with our exact trigger, stop, and target prices for this ETF trade setup if we make an “official” buy entry.

[morpheustrading]

How To Instantly Pick Stocks With Most Relative Strength To The Market

Many active stock traders lack the necessary time to do proper stock scanning and technical research every night. As such, one of the fastest ways to find the strongest stocks in the market, at any given time, is to simply look at chart patterns of stocks with the highest Relative Strength (RS) ranking.

Below is a link to a 4-minute trading strategy video (on YouTube), which shows you exactly how we quickly and easily pick stocks with the highest Relative Strength ranking in the market. Hope you find it to be helpful and informative:

How To Quickly Pick Stocks With Most Relative Strength To The Market - Video

[morpheustrading]

Which Technical Factors Preceded Our Winning Breakout Entry Into $EPU?

On December 31, 2012, we bought the iShares MSCI All Peru Capped Index ETF ($EPU) as a short to intermediate-term swing trade entry in our nightly ETF and stock trading report. Although the position is still open, the ETF is presently showing an unrealized gain of 4% since our initial buy entry on the last day of 2012. For ETFs, which are typically less volatile than leading individual stocks, that’s a solid percentage move over a two-week period. In this post, we take you on an educational walk-through of the technical trading factors that preceded our recent breakout buy entry.

For starters, take a look at the annotated daily chart of $EPU below, which highlights our exact buy entry point, as well as our current target price on the $EPU:



As the chart above illustrates, we bought $EPU on December 31, as the ETF broke out above resistance of the high of its trading range ($45.62). Since then, the price has been pushing steadily higher, and our “official” upside target is now the $49.40 area. Now that you’ve seen the bullish price action subsequent to the breakout, let’s take a more important look at the technical trading criteria that preceded the breakout, which then prompted us to buy the ETF for swing trade entry.

Generally speaking, the price action preceding the late December breakout in $EPU is a good example of the technical factors we look for when stalking an ETF or stock that is trading in a bullish consolidation pattern. Once a clear base of support has formed, we then look for the formation of a “higher swing low” to develop within the base, which lets us know that bullish momentum is on our side. Approximately 90% or more of our ETF and stock breakout entries will have some sort of a “higher swing low” in place prior to our buy entry, and this setup was no different:



After the higher swing low was established in the first half of December, the next step was to look for a tight then look for a tighter, shorter-term price range to develop just below resistance of the highs of the base. Notice on the chart above that this tight price range developed in the last two weeks of December, as $EPU chopped around just below the $45.50 level. Such price action indicated that a momentum-based breakout above the highs of the trading range was likely to occur in the coming days, so we added $EPU to our “official” newsletter watchlist as a potential buy entry, just in time to catch the December 31 breakout.

If $EPU hits our target price at the $49.40 area, we will automatically sell into strength to lock in a sizeable gain on the swing trade. However, in the event price action suddenly starts to weaken along the way, we will simply trail our protective stop tighter to lock in gains in the event of an unexpected bearish reversal. As always, we will keep regular subscribers notified of any changes to management of this ETF trade.

[hags]

$KOL looks low risk and ready to go...higher swing lows and all kinds of MA support...

hags

[morpheustrading]

re. KOL

Yeah, that's what I like the most is that it's low-risk with decent upside...the reward-risk ratio makes it a very ideal swing trade setup, even though it's not trading near its highs as a breakout play would be.

Deron

$KOL looks low risk and ready to go...higher swing lows and all kinds of MA support...

hags

[morpheustrading]

Why Market Vectors Russia ETF ($RSX) Is Ready To Surge Higher

The Market Vectors Russia ETF ($RSX) is currently forming a tight-ranged base (similar to a cup and handle chart pattern) on its longer-term weekly chart below. After rallying 30% off its 2012 low, $RSX subsequently pulled back and successfully tested new support (prior resistance) of its multi-year downtrend line, and now is forming the right side of this bullish chart pattern. The annotated chart below illustrates this:



Drilling down to the short-term daily chart interval, the cup and handle pattern can be more easily seen. The “cup” was formed after the low of the pullback that tested the downtrend line on the weekly chart above, and the “handle” has been forming the right side of the chart pattern just below the prior highs from September of 2012:



As recently explained in this January 15 post on our trading blog, there are specific technical requirements that a chart pattern must exhibit before considering the ETF or stock as a potential swing trading breakout candidate.

First, the price action absolutely must stop making “lower highs” and “lower lows,” and eventually break the downtrend line of the pullback from the prior highs. Once this happens, and the price has formed a “higher swing high” and “higher swing low,” we then have something to work with. Without the higher lows or downtrend line break in place, all we have is a chart in a downtrend and showing no signs of bullish momentum. One key rule of our trading system (view 7-minute video overview on YouTube) is that we do NOT try to predict future price action; rather, we merely react to the trend after it becomes established. As such, we never try to catch the bottom of a rally.

The key moving averages we monitor (20-day EMA, 50-day MA, and 200-day MA) are confirming the recent strength in $RSX. On the daily chart above, notice the 20-day EMA (beige line) crossed above the 50-day MA (teal line) in early December of 2012. Also, the 50-day MA is now above the 200-day MA and trending higher.

In late December, $RSX formed a second higher low, right at near-term technical support of the 20-day EMA, which led to a failed breakout above the prior swing high. However, the pullback from the failed breakout in early January again looks to have found support at the rising 20-day EMA. If this bullish chart pattern is to continue tightening up and forming higher swing lows, then the price action should continue holding above the 20-day EMA. This could lead to a breakout to new highs within the coming days, which is why $RSX has been added to our “official” watchlist as a potential swing trade buy entry. Regular subscribers to our ETF and stock trading newsletter should note our clearly predefined trigger, stop, and target prices for this trade setup in the ETF Watchlist section of today’s report.

[morpheustrading]

Don’t Miss These Two ETFs Ready To Breakout This Week ($KOL, $RW

In our January 10 commentary, we said Market Vectors Coal ETF ($KOL) could pull back to find near-term support in the area of both its rising 20-day exponential moving average and 200-day moving average (around $25.50). Specifically, we said, “we would ideally like to see the price action retrace down to its 200-day moving average and form some sort of bullish reversal candlestick pattern. If this occurs, it would subsequently provide us with a very low-risk swing trade buy entry.” In the days that followed, that’s exactly what happened. This is shown on the annotated daily chart of $KOL below:



The support level at convergence of the moving averages (last week’s lows) looks as though it will hold. If it does, it will create another higher “swing low” on the right side of the base of consolidation. As we have pointed out several times in recent weeks, a valid base of consolidation should consist of both “higher lows” within the base, as well as tightening of the price action. $KOL presently meets this technical criteria.

Because the price action of $KOL has been playing out exactly as anticipated, we are now stalking this ETF for potential swing trade buy entry going into today’s session. Although this is a “trend reversal” setup, rather than a potential breakout to new highs, we like the reward-risk ratio for trade entry near its current price. Regular subscribers to The Wagner Daily trading newsletter should note our exact trigger, stop, and target prices for the $KOL setup in the ETF Watchlist section of today’s newsletter above.

Another ETF poised to rally in the coming days is SPDR Dow Jones Global Real Estate ETF ($RWO), which continues to consolidate in a tight range beneath the highs of its current base. Starting from the beginning of the basing pattern in September, the price action in $RWO is a good example of what we look for when identifying bullish price action within a base:



When looking at a base of consolidation, we typically see more volatility on the left hand side of the pattern, as the stock/ETF initially pulls back from its highs, enters distribution mode, and sells off for several weeks. At one point during the decline, the price action will either “undercut” a previous low and reverse higher or simply explode higher and hold. This usually occurs after the stock/ETF breaks out above the downtrend line from the high of its base, which subsequently leads to the “right side” of the pattern developing with the formation of “higher swing highs” and “higher swing lows.”

With $RWO, notice that the price action bottomed out by undercutting its prior swing low and then reversing sharply off major support of its 200-day moving average (orange line). Since then, the ETF has formed a series of higher highs and lows, with the price action tightening up just below the highs of the base. Note that this tightening of the price does not always have to form just below the highs of the base, as it could form anywhere from 5-10% off the highs and still be technically valid. Regardless, we like the recent price action in $RWO and expect the ETF to soon break out above the highs of the range.

[morpheustrading]

Are Stocks Setting Up For A Near-Term Technical Pullback? ($QQQ, $SPY, $AAPL)

Yesterday’s price and volume action in the broad market produced the first true distribution day (higher volume decline) in the Nasdaq since the big gap up of January 2. While we have seen a few weak, unconvincing instances of distribution since then (ie. price action closed well off the intraday lows), yesterday’s (January 24) price action closed near the low of the day, as shown on the daily chart of the Nasdaq Composite Index below:


Although higher volume declines within an uptrend are not positive, it’s important to realize that a single distribution day does not kill a rally. Although yesterday’s action in the Nasdaq could easily lead to a near-term pullback from the recent highs, we can not rule out the possibility of a strong recovery today, as bull markets tend to close out the week in bullish fashion.

Because of its heavy weighting in Apple ($AAPL), which has been undergoing the healthy price correction we predicted back on November 5 of last year, the Nasdaq 100 Index (large-cap sibling of the Nasdaq Composite) has been a complete laggard in 2013. Yesterday’s decline caused the PowerShares QQQ Trust ($QQQ), a popular ETF proxy that tracks the Nasdaq 100, to close right at short-term support of its 20-day exponential moving average (20-day EMA). This is shown on the daily chart of $QQQ below:



It would be a positive technical signal if $QQQ holds support of its 20-day EMA (beige line on the chart above), or just “undercuts” it and promptly recovers. But if it doesn’t hold near yesterday’s low, the next stop could be a test of the $66 area (support of the lows of its recent trading range). Ideally, we would like to see all the main stock market indexes moving in sync with one another. The Nasdaq 100 doesn’t have to lead the broad market higher, but we certainly do not want the price to break down below the 50 and 200-day moving averages (teal and orange lines, respectively, on the chart above).

The SPDR S&P 500 ($SPY), an ETF that follows the price of the benchmark S&P 500 Index, probed above the prior day’s high yesterday morning, but sold off throughout the afternoon. This caused the ETF to give back most of its morning advance and form a bearish reversal candlestick on its daily chart. Although $SPY closed in positive territory, the retreat off its intraday high that occurred on heavier volume is known as “churning,” which is stealth selling into strength by banks, mutual funds, hedge funds, and other institutions:



If the broad market follows through on yesterday’s negative price action and pulls back in, we could see at least a shallow, two to five-day selloff that causes the major indices to find initial, minor technical support near their 10-day moving averages (not shown on the charts above). Such price action would be an absolutely normal and healthy correction in a healthy bull market. A deeper retracement down to the 20-day EMAs would be a less bullish scenario that could indicate the market may need more time (at least two to five weeks) to form a healthy base of price consolidation.

What do you think? Are you anticipating a near-term correction from current levels?

[billyjoe]

Morpheus, I'm holding at least 7 of your picks for nice gains. Only a couple with small losses. I hope we can preserve most of the gains if the market corrects. Will you lower targets or just sell most if you see the market start to falter?

---------------------billy

[morpheustrading]

Hi Billy,

Sorry it took me a while to get back to you. I haven't been able to log in here to check messages for a few days.

Anyway, since your January 25 post, we have sold several positions because we tightened their stops to lock in gains in case they started pulling back. Generally, we trail stops to protect profits after we are showing an unrealized gain that is at least double the initial risk (2 to 1 reward-risk ratio). Alternatively, we also sell stocks and ETFs as they hit our initial target prices (whichever comes first).

Not sure if you are a subscriber to The Wagner Daily newsletter or not, but we actually list our exact, predetermined stop prices for all swing trades every evening (for the next day's trading session).

Hope that helps.

Deron

Morpheus, I'm holding at least 7 of your picks for nice gains. Only a couple with small losses. I hope we can preserve most of the gains if the market corrects. Will you lower targets or just sell most if you see the market start to falter?

---------------------billy