IBD has a relatively new investment service called Swing Trader. Now, to be fair, there is nothing new about swing trading. What makes this slightly different is that their swing trades are based on IBD CANSLIM investing.
What is CANSLIM?
It is an investment system based on both fundamental and technical analysis. CANSLIM is an acronym for the seven traits winning IBD stocks have before they breakout.
- Current Quarterly Earnings – increasing quarterly sales
- Annual Earnings Growth – at least 25% or more for the past 3 years.
- New Product, Service, Management or Price High
- Supply and Demand – high demand for limited supply of shares.
- Leader or Laggard – industry leaders with superior earnings and sales.
- Institutional Sponsorship – funds account for 75% of all market activity.
- Market Direction – 3 out of 4 stocks follow the market’s trend.
IBD has a 30 day free trial for their Swing Trading service. I decided to sign up. Not necessarily to spend even more of my hard earned money but rather to see exactly how well they are doing. To be honest, one could consider some of my trades swing trading. My style of investing is quite similar to IBD in that I look for good technical setups and momentum trends of well-run or popular companies; but above all, when it comes to truly short term trades, I look for opportunity.
Case in point, some of my more recent trades were based on what I thought was opportunity.
- When Amazon announced buying Whole Foods, and selling SEARS Appliances; Home Depot, Walmart, and Best Buy took a price hit yet recovered quite nicely.
- When Disney announce they were leaving Netflix, NFLX took a price hit, and interestingly enough, filled the gap from their recent quarterly report breakout and found support.
- And more recently Hurricane recovery trades with Home Depot, Restoration Hardware, Lumber Liquidators, Owens Corning, Generac Holdings and General Motors.
None of these stocks, except NFLX, made it on to the IBD Swing Trader alerts.
Looking back over the IBD Swing Trader alerts for the past year, I am less than impressed with the overall average return of .50%. However their two currently active trades are based on classic setups and are performing quite nicely.
So, do you ever make short term trades, and if so, what are some of the triggers you look for?