Swing Trading: Bull, Bear or Balanced? Trading and Investing for the Long Term

In a world of raging bulls and ferocious bears, The Machine provides a unique opportunity for the independent trader who would rather just be consistent, systematic and, above all, balanced when it comes to trading and investing.

Building a balanced approach to trading and investing is a key component in being able to not just survive, but to have the potential to truly thrive regardless of whether the market is moving up, moving down or moving sideways.

True balanced trading and investing means making important choices about stocks, but also about exchange-traded funds. Balanced trading and investing means being open to opportunities to trade both to the long side and the short side. You can see examples of this every day in 7 Stocks You Need to Know, for example, which features both stocks that have pulled back as well as stocks that have become overbought.

Balanced trading and investing also means putting money to work in different timeframes, both the short term swing trading timeframe and the longer-term trend trading timeframe.

This is another reason why we advocate a “portfolio of strategies” approach to trading and investing rather than a portfolio of stocks” approach. A trading portfolio of strategies for buying pullbacks as well as for selling overbought rallies is a portfolio that is more balanced, more diversified and more able to take advantage of the different kinds of trading opportunities that the market provides every day.

So the next time some one asks you if you are a “bull” or a “bear”, tell them there’s a better third option that doesn’t rely on hoping and guessing whether the market is going to go up or down.

For more on strategies for building balanced, diversified trading portfolios, read our latest column from Larry Connors, founder and CEO of TradingMarkets and Connors Research, at the link below.

Diversify Your Portfolio: Trading and Investing with The Machine – presented by Larry Connors

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Here are 7 Stocks You Need to Know for Monday.

Scheduled to report quarterly earnings on Monday is ^NFLX^. The stock bounced in Friday’s session after closing lower for three out of the previous four sessions – including one in oversold territory above the 200-day moving average.

Shares of ^CSCO^ closed higher below the 200-day for a fourth consecutive trading day on Friday. Both of the stock’s last two closes have been in overbought territory below that level.

Soaring into overbought territory below the 200-day moving average were shares of ^AMD^, among the strongest in a strong sector on Friday. AMD gained more than 19% to lead the S&P 500. Fellow semiconductor name ^SNDK^, rallied by more than 9%.

Two days in overbought territory above the 200-day were enough to bring out short-term profit-takers in ^VZ^. The stock pulled back by well over 2% on Friday after rallying for three consecutive trading days.

Traders also took advantage of recent gains in ^CAT^ to take profits. The stock pulled back by more than 5% ahead of trading on Friday after a three-day rally.

Up by more than 1% on the final trading day of the week and closing higher for a sixth day in a row were shares of ^AAPL^.

To get 7 Stocks You Need to Know delivered for free every evening after the market closes, click here.

David Penn is Editor in Chief of TradingMarkets.com

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