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It has been quite a while since I took a swing trade last time.  One reason is that I focused too much on the short side.  Consequently I found almost no good opportunities for swing trading.  Another reason is that I wanted to hone my day trading skills, expescailly scalping.

I have been watching MOS and POT lately for a possible swing long position.  These 2 are the leaders of the fertilizer stocks.   I talked exclusively about MOS and POT on the mailing listing last night.  The fertilizer stocks lagged behind the other sectors during the rally that started in March.   Sectors rotate.  I also mentioned about the coal sector about a week ago. But I was too slow to join the rally in those coal stocks such as MEE, WLT and PCX.

From the daily charts of MOS and POT, we can see that the first pop came about 2 days ago.  If I had been quick enough, I should have bought into them that day, instead of today.   Another sign that they demonstrated was that they were extremely strong in a very weak general market yesterday.  POT was up 2% and MOS was sligtly down 2%.  They performed much better than most other stocks.  These strong stocks will be the first to move up once the general market is stabilized ,as we all saw how they performed today, MOS(+8%), POT(+5%).

POT performed slightly better than MOS yesterday.   And  I figrued that MOS would try to catch up with its brother later on. That is the reason I chose MOS today.  I kept my postion very small due to the risk of holding it overnight.  I am always prepared for the worst in case anything like Lehmen Brrothers or Bear Sterns happens to me.

Once I have identified a possible opportunity for swing trading,  I will use my day trading techniques to open a position.  So basically I open a position once my mid-term and short-time time frames are aligned. This greatly reduces the possibility of being whipsawed.  Normally day trading entries are much more accurate than swing trading due to the much higher requirements for accuracy.  With the accuracy of day trading and a wide stop loss of swing trading, you can greatly improve the success rate of your trades.  See the 5 minute chart below. If you use TradeStation, you know that it marks every entry and exit of yours on the chart.  My entry was a text-book wedge breakout.  

Click the pciture below to have a better view.  You can see a white lable saying (150 limit).

 
Of course, paper profits are nothing more than illusion.   Let’s see if my MOS can hit the target.