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In this post, I would like to briefly run through what Collin covered in the webinar for this week on the 1st of October.
In his webinar, the swing trade which he specially highlighted, was a short on the HSI.
Since Monday, the HSI pays out well with the short working out very well, tumbling over 1300 points.
He also talks about the 6 important distinctions of Swing Trading which you will want to know.
Below is his summary, enjoy!
Last week, the S&P 500 index was considered oversold. This week, it has corrected itself. There is a measured pullback, which indicates that the bulls are still in control.
Weekly charts still show that the index is overbought. Other markets like the HK or SG market are experiencing a downtrend.
The US market is rather strong with its longer term weekly charts being overbought and experiencing only shallow pullback but it is experiencing a parabolic trend. A turn is usually expected, but we won’t try to pick a top just yet.
Therefore, it is not recommended to trade long term as the market does not have clear indicators as to when it could potentially turn around. Short term trading such as swing trading is fine.
Short term going forward, a potential swing buy on the daily charts, but the medium and long-time frames, one should not buy yet.
Not recommended to short for S&P 500, better markets out there to short.
Daily chart has surpassed 40 moving average, short position should be closed for short term
For the longer term, there is a weekly downtrend. Expect downtrend to continue for the moment.
Good opportunity to short as the price approaches the sloping down 20 moving average, provided your holding period for the stock is at least a month. Sep and Oct are generally weak months, Nov will be stronger.
Hang Seng Index
Weekly charts there is a downward trend, preceded by a parabolic shape.
However, there is a slight upward movement.
Once it goes down again, there will be a short opportunity.
This is a small risk yet high reward, so one should take note and be alert of the trigger.
Breaking new highs right now. Trade war benefitting Japan more than Shanghai and Singapore?
S&P and Nikkei seem to be faring much better than STI and Hang Seng Index.
6 important distinctions for swing trade setup:
- 5 days or less for pull back
- Measured pull back, small candles
- Swing candle up should be longer, swing candle down should be shorter
- Make recent high. From the high, look back 3 months and determine if it is a higher high.
- Price should not go above 40 moving average
- Should not be parabolic high. Longer candle is riskier to trade.
Current interesting setup:
Among all the indices examined, I think the Hang Seng Index offers the best setup for a swing trade short.
I hope you all find this post beneficial with a better understanding of swing trading and the current market outlook in my view.
If you would like to find out more about how to read the markets better,