Utility Stocks: Where Swing Traders Find Their Stocks

Swing traders looking for stocks which are almost guaranteed to produce big moves always look towards the most volatile stocks. Stocks which led the market in percentage gains, or losses, traded unusually high volume and newly listed stocks are the best sources for swing traders. Basically this can be accomplished by running a screen for stocks which are already moving a lot over the last 10 days, 30 days, 100 days, etc.

Investors got a little spooked last week when the sell-off began in the stock market after two months of steady growth. The trend of the major indexes still remains higher and markets have recovered slightly as the week came to an end, but the possibility of another decline cannot be ruled out. It is for that reason many of the utility stocks should start being researched for swing trades in the coming week.

When markets decline, one of the few sheltered stocks are those of utility companies, often acting as a safe haven. If another broader market decline happened, there are four or five major utility stocks to apply your swing trading strategies to profit from. They are the stocks which are most likely to take the decline the mildest, weather the storm and might even provide a profit as the majority of stocks fall.

Global stock markets have been strong so far in 2012. Swing traders have had fewer opportunities for major swings in stock prices like in the past few years. While the bullish trend continues in the markets, swing traders can start to concentrate applying swing trading strategies on a pullback which will eventually come. The stocks in the utilities sector often provide some safety during a broad market decline. It doesn’t necessarily mean that utility stocks won’t decline, but history proves that when the broader market is in a sell mode that some of that money usually flows into the utility sector.

This means swing traders can start to pay attention to utility stocks and look for buyers to start flocking towards them. When it happens, apply your swing trading strategies on the stocks you monitor and expect to see some moderate swings in price.

Swing traders tend to adjust their swing trading strategies depending which direction the market is moving. Swing traders can use a stock screen to target stocks which are moving, providing a bigger bang for their buck than the stocks which are stagnant. If the screen you’re using doesn’t provide a long enough list, simply tweak it to come up with a slightly longer list. Some of the stocks you will find will have experienced volatility over the longer-term, while others have just recently witnessed volatility.

Be sure you have a swing trading strategy in place before trading any of the stocks you find, as they are volatile and can result in large losses if not handled correctly.


***Reminder: never chase stocks that gap at the open and always protect your profits!

Good luck in making the Best Penny Stock picks.

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