A stock in a prolonged uptrend often offers multiple swing trading opportunities. Of course, having the market in your favor helps. Veeva stock provides a recent example.
Swing Trading Example: Veeva Stock
Veeva Systems (VEEV) is a member of the Long-Term Leaders watchlist. While it’s had a strong move over the past four years, Veeva stock also has long periods of sideways action. That’s what we want to avoid in swing trading.
After the September correction, Veeva stock joined SwingTrader as it broke above an area of resistance after finding support at its 50-day moving average line (1). It was a couple of days before the follow-through day, but we saw early recovery signs with more positive action in leading stocks like Veeva.
However, we exited quickly after Veeva stock failed to make progress after a couple of days to keep our loss small (2). With our current position size of 9%, we can take a 3.5% loss on a stock and suffer only about a 0.3% hit to our portfolio. By also reducing the number of trades, we keep the destruction from stock market corrections minimal.
Another Bounce, Another Try
Though we took a loss on Veeva stock, it didn’t stop us from making another attempt. Two days after our exit, we put it back on SwingTrader (3).
It went sideways for another couple of days but then gapped up as the general market continued to improve (4). We booked profit on a third with a 4% gain on Veeva stock and then another third with a more than 7% gain from our entry (5). It might seem odd to be taking profits on what looked like a fresh breakout. But selling into strength will often put you in a stronger position to withstand market weakness later.
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When Veeva stock showed a shakeout just a few days later (6), the early profit-taking made it easier to not panic. Veeva stock had an ugly open but just giving it a little time paid off with a strong close. As stout as that reversal was, we exited the remaining third the next week. It looked like we would get a decisive close below the 10-day moving average, a strong sign that the short-term uptrend was in trouble (7).
Stocks Set Up But Couldn’t Follow Through
As the Nasdaq composite looked like it was forming a cup-with-handle, we anticipated more swing trading setups. Veeva stock was among them. We gave it another try (8) as it looked it gained support at its 21-day line and around its former high. We had about a 2.1% profit before it turned south again (9) and we exited.
The Nasdaq composite also lost support at its 50-day moving average line that day. A stark reminder that when the stock market shows weakness it’s best to play defense with your stocks. Despite an attempted rebound, Veeva stock just fell further and could have easily led to a larger loss (10).
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