It’s not uncommon to see a penny stock surge by double-digits in a single day…
But when you start to see similar moves in multi-billion dollar companies it’s something else.
Especially, if you don’t see a real catalyst to justify the move. But maybe you missed something. Or the big money knows something you don’t…
And that’s the thing…
Trading these larger companies requires a totally different approach.
I’ve seen a ton of opportunities in large-cap swing trades lately, so I’m excited to share my latest idea with you today!
I’ll explain why this stock makes such a solid swing trade idea and where you can look for a potential entry.
My Latest Swing Trade Idea
Today’s swing trade idea is a top watch based on three essential factors: volume, a breakout to new one-year highs, and news in a hot sector stock.
Let’s break down why they’re important and what to watch for today…
Volume: The Secret Sauce
The volume is the number of shares of a stock being bought and sold in a given time.
When a stock has high trading volume, it means many people are interested in buying or selling it, and that’s what we want.
We want to trade stocks with lots of demand so they have the potential to go higher.
Demand also squeezes shorts and that’s part of what creates big moves like this…
UPST chart: 1-year, daily candle — courtesy of StocksToTrade.com
The other criterion that makes Upstart Holdings, Inc. (NASDAQ: UPST) a solid swing trade idea is its…
Breakout to New One-Year Highs
UPST has been climbing steadily for over two months. Then yesterday it had a massive upside move with a breakout to new 52-week highs.
I like swing trade candidates to have breakouts because it can attract more buyers, and it’s a clear trend with momentum to the upside.
There’s less resistance overhead so the stock has the potential to go higher.
UPST has a gap to fill on the two-year chart all the way up to around $72. It doesn’t mean it will go that high, but there are clear skies above…
UPST chart: 2-year, daily candle — courtesy of StocksToTrade.com
News And A Hot Sector
UPST also benefited from a research firm’s price target upgrade yesterday.
But it’s also in the hot AI sector since it operates a cloud-based artificial intelligence (AI) lending platform.
It was running with other AI stocks and alternative banking plays yesterday like:
- C3.ai, Inc. (NYSE: AI)
- Affirm Holdings, Inc. (NASDAQ: AFRM)
- Applied Digital Corporation (NASDAQ: APLD) — which was also my speculative swing trade idea from a couple of days ago.
So now we know the why behind this trade idea. How can you execute a trade?
Potential Swing Trade Entries
UPST climbed all day, ultimately broke out, and closed near its highs. I expect to see some profit-taking this morning which means we’ll probably see a pullback.
So I’d watch for a red-to-green move as a potential entry. Or a break above yesterday’s high.
I’d like to see this fill the gap on the two-year chart as I mentioned earlier. But with swing trade, we don’t expect the stocks to make those big moves in one day.
You need a little more patience for these trade ideas, but that doesn’t mean accepting more risk.
Have a risk management plan and stick to it.
If you’re a part-time trader that’s interested in learning more about swing trading — and how AI can help you spot trade opportunities — don’t miss my event tomorrow night where I’ll reveal a project that’s been years in the making!
See you there.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade