Swing Trading

Swing trades are trades which I intend to hold overnight and usually for 2-3 days with an expectation of a profit of 20-40 points depending on circumstances. This sort of trade is "long term" for me when contrasted with my usual day trades which might last only an hour or two.

In October 2011 I resumed swing trading in an account separate from my day trading account. I had spent most of the preceding several years day trading exclusively. I thought that I could explain how to swing trade using only the information contained in the daily bar chart, not the intraday  information upon which I rely for my day trading.

This effort proved to be little short of a disaster. By the end of 2012 I showed a per contract loss of  117.75 points on these swing trades, without a doubt the worst performance in any kind of trading I have ever experienced.

Sometimes the market hits you between the eyes with a big stick. When it does it is trying to get your attention, urging you to step back and reconsider your approach. In this case I concluded that my original premise, namely that I could ignore intraday information, was completely wrong.

I spent 2013 making some adjustments and reformulating my swing trading approach using intraday information. I resumed swing trading at mid-year and in three months showed a net loss per contract of only 7.75 points. A big improvement but still not where I wanted to be.

So I stopped again and resumed swing trading a second time in January 2014. As of February 28 I am up 38.60 points per contract for the year to date.

I will soon start posting monthly results for 2014 going forward. The will have the same format as my day trading results.

However the rates of return on swing trades will assume that one contract is traded per $15,000 of account equity (as opposed to one per 10k of equity for day trades) since overnight margins for the ES are nearly twice (about $4,500 per contract) day trading margins.

All results are reported net of $5 per contract round turn commission. Open trades are marked to the market at the end of the month.

2014:  monthly profit (loss); 2014 to date profit (loss) - swing trades only - day trades NOT included in these results

January : (6.20) ;  (6.20)

February : 53.25;  47.05

March : (4.45);  42.60

April : 4.15;  46.75

May : 9.05;  55.80

June : (3.10);  52.70

July : 4.35;  57.05

August : (2.70);  54.35

Guesstimates on February 28, 2014

March S&P E-mini Futures: Today’s range estimate is 1848-63.  I still think the ES is headed above 1900 over the next couple of months but a significant break of support at 1829 would mean that a drop of 50 point or more is underway.

QQQ:  Upside target is 91.

TNX (ten year note yield): I think the market will move to 3.50% over the next few months.

Euro-US Dollar: The Euro is headed up to 1.43.

Dollar-Yen: The dollar-yen is headed for 107.00.

April Crude:  I think crude is headed back to 86 and possibly lower than that. I expect resistance at 102-103 to hold but if it fails then crude will probably head up to 111 or so.

April Gold:  The market has breached 1290 resistance decisively and is now headed above 1400.

March Silver: Silver has moved above its 21.30 resistance level and a move as high as 26.00 is underway.

Google:  Support is at 1060. Next upside target is 1250.

Apple:  The uptrend in AAPL from its 385 low last April is still intact. My best guess is that AAPL is headed for 600 and higher.  

checking the leaders

Here are daily charts of three of the current leaders of this bull market. I last commented on these three stocks here. Before commenting on them now I want to make a few remarks about the general market trend.

The Dow, the S&P 500 and the New York Stock Exchange advance-decline line are currently all above their 50 day moving averages. This tells me that the bull market trend is still strong and intact. The Dow, however, has yet to make a new bull market high and is closest of the three indicators to its 50 day moving average which currently stands at 16,141. The S&P is a little stronger, having made a marginal new high for the bull market. Its 50 day average is at 1820. The NYSE advance-decline line has made a new bull market high by a wide margin and is nowhere near its 50 day average.

Any significant weakness going forward from current levels would put the Dow and the S&P below their 50 day moving averages. Such a configuration would be bearish, especially since the Dow would then be coming down from a lower top. That would identify this lower top as point 27 in Lindsay's three peaks and a domed house. The implication would be that the Dow and the S&P are headed to or below their October 2013 low points.

At the moment I don't think such a bearish development is in the cards. The advancing issues oscillators on my chart page are all coming down from very high levels and in a bull market that generally means that the associated top in the averages is still weeks ahead of us. I still think the Dow will make a new high for this bull market and that the S&P will trade above 1900 before any big break materializes.

Turning to the charts above this post you can see that Facebook and Visa are still in strong up trends.

Facebook has nearly reached my 73 target and the next development will probably be a drop of 10-12 points which would match the size of the two preceding reactions and bring FB down to its support at its January top and put it a little below its 50 day moving average.As long as FB holds that support another up leg can be expected to follow.

Visa is continuing its pattern of 20-25 point reactions and I am sticking with my 270 upside target.

Twitter reached the lower edge of my upside target zone of 75-78 but the subsequent drop broke the two support levels I cited in my last post (linked to above). You can see that TWTR has dropped below its rising 50 day moving average which itself is starting to flatten out. There have been a pair of 12 point rallies on the way down from 75 and a rally that big from 50 would put TWTR at 62. For the moment I expect resistance at 62 to hold and if it does the next step down will be to 40.

Guesstimates on February 27, 2014

March S&P E-mini Futures: Today’s range estimate is 1833-46.  I still think the ES is headed above 1900 over the next couple of months but a significant break of support at 1829 would mean that a drop of 50 point or more is underway.

QQQ:  Upside target is 91.

TNX (ten year note yield): I think the market will move to 3.50% over the next few months.

Euro-US Dollar: The Euro is headed up to 1.43.

Dollar-Yen: The dollar-yen is headed for 107.00.

April Crude:  I think crude is headed back to 86 and possibly lower than that.

April Gold:  The market has breached 1290 resistance decisively and is now headed above 1400.

March Silver: Silver has moved above its 21.30 resistance level and a move as high as 26.00 is underway.

Google:  Support is at 1060. Next upside target is 1250.

Apple:  The uptrend in AAPL from its 385 low last April is still intact. My best guess is that AAPL is headed for 600 and higher.  

Guesstimates on February 26, 2014

March S&P E-mini Futures: Today’s range estimate is 1845-1860.  I think the ES is headed above 1900 over the next couple of months.

QQQ:  Upside target is 91.

TNX (ten year note yield): I think the market will move to 3.50% over the next few months.

Euro-US Dollar: The Euro is headed up to 1.43.

Dollar-Yen: The dollar-yen is headed for 107.00.

April Crude:  I think crude is headed back to 86 and possibly lower than that.

April Gold:  The market has breached 1290 resistance decisively and is now headed above 1400.

March Silver: Silver has moved above its 21.30 resistance level and a move as high as 26.00 is underway.

Google:  Support is at 1060. Next upside target is 1250.

Apple:  The uptrend in AAPL from its 385 low last April is still intact. My best guess is that AAPL is headed for 600 and higher.