7 of the best swing trade stocks available right now
Swing trading is a short term strategy. And with that, traders usually enter and exit a position within days or weeks. Overall, most of this style of trading is based on technical market indicators. And that makes a few tickers stand out among the best swing trade stocks on Wall Street.
In addition, swing traders are generally not concerned with fundamental analysis. Their aim is to take advantage of short-term imbalances of supply and demand in a market.
However, most beginner swing traders lose money. This happens because they don’t understand the most important rule in trading: having an exit plan.
Before a trader takes a position, he owes two targets. One is where they will take profit, and the second is where they will take a loss.
In addition to having a well-defined exit strategy, there are two other things that successful swing traders usually consider.
The first is a catalyst or a reason for establishing trade. It could be things like breaking a major level or extreme overbought or oversold conditions. This is called configuration.
The second thing is a trigger. This is the reason to enter the position, and it is what makes a trader put his money on the line.
With all of that in mind, here are seven examples of how an experienced swing trader would look for profit opportunities. They are:
- Alphabet (NASDAQ:GOOGL)
- SPDR real estate fund (NYSEARCA:XLRE)
- Limbach Holdings (NASDAQ:LMB)
- Oncorus (NASDAQ:ONCR)
- Unilever (NYSE:UL)
- Goldman Sachs (NYSE:SG)
- Call service (NYSE:PD)
Now, let’s dive in and take a closer look at each one.
Best Swing Trade stocks: Alphabet (GOOGL)
If a swing trader looked at Alphabet, the first thing they would notice is that they are overbought. It is about the dynamics of action. This means that it is trading at an extreme distance above its recent average price. It could be the configuration.
The lower part of the graph above is the Relative Strength Index (RSI). He measures momentum. As you can see, GOOGL stock was also overbought in early September. A massive sale followed.
There is support for the stock around the $ 2,050 level. If that level breaks, it could be the trigger or catalyst for a swing trader to sell GOOGL stocks short.
If this support breaks, the same level could be used as a stop price. In other words, if a swing trader shorted the GOOGL stock and traded above that level, he would hedge or buy back the short stock with a small loss.
A logical place for a profit target is the $ 1,800 level. The action traded there from early November to mid-January. This means that if GOOGL stock goes down there will likely be some buyers around that level. This means that he would stop falling and the swing trader could buy back his stocks short and make a good profit.
SPDR Real Estate Fund (XLRE)
The first thing a swing trader would notice if he took a look at the SPDR real estate fund is that it just broke resistance at $ 38. Resistance is a large concentration of sellers who have gathered around the $ 38. As you can see from the chart, in June and November a massive sell off followed after XLRE stock hit this level.
But now XLRE action has broken resistance. This means that it is trading above this level. It could be both the setup and the trigger.
Buying a stock or an exchange traded fund (ETF) after breaking resistance is a common swing trading strategy. In effect, this means that the sellers who created resistance have either completed their orders or left the market. With this supply of shares out of the market, buyers will have to pay higher prices to acquire shares. This puts the stock in rally mode.
$ 37.75 would be a logical place for a layover. If the stock fell back to this level, it would mean that resistance is not quite broken. The swing trader who bought XLRE shares just above $ 38 would sell at $ 37.75 and take a small loss.
$ 42 would be a logical place to sell at a profit. You can’t see it on this chart, but XLRE stock last February encountered resistance at this level. That means there’s a chance he’ll meet resistance there again.
Best Swing Trade stocks: Limbach Holdings (LMB)
Support is a concentration of buyers rallying around a certain price point. When stocks reach support, swing traders may view this as a setup. If support breaks, this could be the trigger to sell or sell a stock short. Broken support means buyers have left the market and there is a good chance that the stock will continue to fall.
As you can see from the chart, Limbach Holdings broke support at the $ 12 level. This could be a trigger to take a short position. Its value will increase if the LMB share tends to fall.
A logical place to get arrested is around $ 12.10. If it’s gone up there, that means the buyers have come back. The swing trader who was short would buy back his shares and suffer a small loss if he climbed back to that level.
A logical place to buy back the stocks they’ve sold short might be at the $ 10 level. There is generally support at good levels. This means that if LMB stock tended to fall, it would likely find a bottom there.
Most computerized trading programs are based on probability theory and statistics. And they suggest that 95% of all trade should be within two standard deviations of the recent average. If a stock breaks this threshold, swing traders would expect a mean reversion.
The black line on the chart above is two standard deviations below the recent 20-day average. As you can see, Oncorus is below. This means it is oversold. A swing trader might target the ONCR stock because they expect it to revert to the mean. In this case it would mean a rally so they would be buyers.
In this situation, being oversold could be both the setup and the trigger.
A possible profit target would be if it reverted to its 20-day average price. In this case, it would be around the $ 24 level.
One possible stop strategy would be a timed stop. For example, if the ONCR stock does not return after three days, the position would be sold at breakeven or at a small loss.
Best Swing Trade stocks: Unilever (UL)
Click to enlarge
The first thing a swing trader would see if they looked at Unilever is that it’s oversold.
The lower part of the chart is the Relative Strength Index (RSI) momentum indicator. As you can see, the UL stock was oversold at the very end of October. A significant upward movement followed.
The setup here is the oversold conditions. One trigger could be to place a buy stop order just above where UL is currently trading. It means buying a stock above the current price. It might sound counterintuitive, but it does mean stopping is a rally.
For example, if the UL stock reaches $ 56, there is a good chance that the sale is over. A swing trader would buy it if it were to reach that level.
A stop could be at the $ 54 level. If UL succeeds, it means that there is a good chance that it will continue to decline. The trader who bought it at $ 56 would sell it at $ 54 and take a small loss.
A profit target could be the $ 60 level. There is usually resistance at round levels, so if UL stocks get there, they will likely reach resistance.
Goldman Sachs (GS)
Goldman Sachs reached resistance around the $ 305 level. As you can see from the chart, this level was resistance in January. So reaching that level again is setup.
A trigger here to sell or go short would be a breakout of the uptrend line. It’s the red arrow on the graph. As long as the GS stock stays above this level, it means buyers are responsible.
But if the trendline breaks, it would mean that sellers are about to take over. At this point, a swing trader would sell or short sell the stock. If the trendline does not break, no position will be taken.
But if a short position is taken, a good place to have a profit target would be around $ 275. This level was support at the end of January. There is a good chance that there will be support again and the GS stock will stop falling.
A stop could cost around $ 307. If the GS stock reaches this level, it means resistance has broken and the stock may be trending higher. A short seller could buy it back at this level for a small loss.
Best Swing Trade stocks: duty of appeal (PD)
As you can see from the chart above, Pagerduty has hit resistance. Levels around $ 57 were resistance in May 2019. Coming back to that level could be a setup.
The red line represents two standard deviations above the recent mean. The PD stock is also above this level, and this could be the trigger for the PD stock to be sold or shorted.
As we have seen, stocks tend to sell if they don’t break resistance. They also tend to revert to the mean if they reach an extreme distance above the recent mean. In this situation, that would mean selling.
A stop could be placed at $ 59. If the PD stock reaches this level, it means that resistance has broken and will likely continue to rise. The trader who shorted the PD shares at $ 57 would buy back the short sold shares for a small loss.
A profit target could be $ 51. This makes sense because it is three times larger than the potential loss.
At the time of this publication, Mark Putrino had no position (directly or indirectly) in any of the aforementioned titles.