Market Bias

Swing Trading presumes that a Stock is in an existing trend (up trend or down trend).

In most cases, the Stock Movement mirrors Market Movements. For example:

• if the overall market is going up, it is most likely that the up trending stock will keep swinging up, and / or 

• If the overall market is going down, it is most likely that the down trending stock will keep swinging down. 

So to swing trade stocks, we usually look at the general market condition. We look at the 50day moving average (50MA) of the S&P 500 Index:

• If the SP500 50MA is trending UP, we say that the market is UP, and we only do UP swings, 

• If the SP500 50MA is trending DOWN, we say that the market is DOWN, and we only do DOWN swings, 

• If the SP500 50MA is going SIDEWAYS, the market is NEUTRAL …  in this case, we do not do any swing trading … but we may trade advanced option strategies such as  Vertical Spreads, Iron Condors, Condors, Butterflies and so on. 

Next: Swing Trading Fundamentals ...