What is swing trading? The idea is that you take advantage of short-term moves in stocks and then lock in your profits while you have them. Selling into strength is a key component and it ends up helping your portfolio reduce drawdowns. Sometimes, you might go right back into the same stock or ETF and participate in another move, like we did with the nuclear stocks ETF VanEck Uranium and Nuclear. It's a prime example of how you can get supercharged energy for your portfolio without blowing up.
Nuclear Stocks Power Higher For The Summer
With all the talk of the huge energy needs of artificial intelligence, electric vehicles and more, it's no wonder the nuclear space has garnered attention. After a strong move from the April lows, a pullback in NLR over the summer offered a solid swing trading entry with a bounce from the 21-day line (1). We started it as a full position (10%) on SwingTrader.
To be clear, this wasn't buying weakness. We start with an equity that's already in an uptrend and we use the bounce as our evidence that the pullback might be over. Upside reversals are great in this regard. Not only do you get a lower price but you also have a clear area to cut a loss if the trade doesn't work.
But the nuclear stocks trade worked well enough that we added another 5% position the next day as it continued higher (2). We traded around the position taking some profits and adding back on strength (3). As we started getting extended and were sitting on good-size profit, we started scaling out with a trim of the position on strength (4) and remainder on weakness (5).
Just because you've had one good trade in a sector, doesn't mean you can't have another. After a sharp drop below the 21-day line, the nuclear stocks joined SwingTrader again with an entry as NLR popped above its 21-day line (6). It was right around where we trimmed it in the previous trade. Almost the same price but we just avoided the downdraft.
Recognizing that NLR hit some resistance early (7), we started locking in profits near the highs and exited the remainder (8) before another dramatic pullback. It wasn't as big of a gain as our previous trade but it still moved the needle for the model portfolio.
Swing Trading Is About The Odds
As much as it's great to showcase winning trades, they don't all work. After a venture below its 50-day moving average line, NLR started bouncing again and we went with another entry (9). We hesitated a little at first because the pullback was so steep and we wanted more evidence that the strength was there. But given our extended entry, we were quick to protect ourselves and exited the next day for a loss (10). But relative to our gains, the loss was minor. That's a key tenet of swing trading. Keep losses small so that your winning trades can compound.
Sure the nuclear stocks started moving again just over a week later but we sidestepped the sideways action and got to use that money for other positions or to keep as dry powder for a new round of setups.
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But we still didn't give up on the trade. As NLR crossed 125 this week, it joined SwingTrader again (11). By the end of the day, we already had enough of a gain that was worth protecting. That led to a trim ahead of the Fed meeting (12) that we immediately bought back the next day (13). In just a few days, we're already up nearly 10% from our entry. We captured strong moves on the nuclear stocks position while avoiding the worst of the volatility. That's how you avoid blowups in your portfolio.
More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available. Follow Nielsen on X, formerly known as Twitter, at @IBD_JNielsen.
