Swing Trade Idea: Long UTX

Here's an idea for a swing trade for tomorrow. Long UTX at 68.25, which is the high of the last hourly candle of today's trading. Why not just jump in at the closing price of 68.15? Because you want to see it open strong and hold yesterday's lows...trading up to 68.25 will be an indication strength. The profit target is $75 and a stop should be placed at 66.80. This gives the trade roughly a 4.5:1 risk to reward ratio. Here's the chart:This trade offers a very tight stop which is important for this type of trading environment. If you're wrong on a trade, you want to pull the plug quickly. Furthermore, there is quite a bit of potential for this trade if it breaks higher...this stock's sector(XLI) is particularly strong as well. If the price rises, I'll be trailing my stop with the volatility stop (using 4.5 multiple and 20 period settings) on the 1 hour chart. Note that the trade plan has a profit target set for $75, however I will continue to trail my stop past this point, unless XLI is not still in a buy mode...if that's the case, I'll take half profits at 75 and trail the other half.

The important thing to take away is the stop...a hard stop. The market has been rather shaky lately, and all it would take is a small rally in the dollar, more Dubai-like bad news, or a nasty jobs report this coming Friday and this market could tank. As always, we'll see how this one turns out. Remember, it's just a probability, never a certainty.

TLT