Moving To Offense

November was a great month for equities. And that run has carried onto December.

The market feels different, with stocks rallying and not getting heavily sold into, and even stocks starting to trend.

How do I monitor this?

The 10% within 52-week highs filter on SharePad.

Search “Michael” and you’ll see all of my filters appear there.

Basically, the more results that appear this means the more stocks are trading within 10% of their respective 52-week highs.

This number has been gradually increasing. Which means, on average, momentum is shifting for the better.

Does this mean it’ll continue? Is this the start of the new bull market?

I believe this is the beginnings of a new early stage bull market.

Inflation looks to have eased (and potentially peaked) with the market now pricing in rate cuts for next year.

November’s inflation numbers for the UK came out yesterday, with the data showing inflation slowed sharply to 3.9%.

Obviously, if that reverses, it’ll throw a spanner in the markets. But my job is not to be an economic analyst and instead I press buttons based on what charts and volume show.

There is already a lot of evidence that UK stocks are cheap.

Many are being taken private at higher valuations than they’re currently trading for.

Every week we see new takeovers and quality businesses being gobbled up.

However, buying stocks just because they’re cheap is not my strategy.

And cheap stocks can always get cheaper.

But there has been a rising number of stocks popping up on my 52-week high filters and many stocks have rallied hard and even doubled in the last two months.

Now, this doesn’t guarantee a new bull market.

But what is clear is that stocks are now trending and swing trading absolutely should be on the menu.

I am allocating more risk to swing trades because this is what the data is showing.

If these initial trades are profitable, then it makes sense to try to get more long and switch to offense.

I like to think of myself as a General who is in charge of a trading account. Each unit is a soldier. A General’s job is to win wars, and that is done by tactically manoeuvring your units into battle where you have an advantage.

It also means knowing when to cut your losses and run, and live to fight another day.

This bear market has claimed many a fallen General, who, by an abject failure to respect risk has blown their account. They won’t be back.

And if you’ve made it this far - then you can probably keep going.

2023 has been a tough year for swing traders. Shorting has not been easy because of the increased risk. But if I am right, then 2024 could be a great year indeed.

Here are some of the stocks I’ve flagged up for further research or just a chart that is appealing.