(Sorry this response is so long)
When the market is going up, like the Dow was over the last few weeks, I try to stay mostly long. For long plays, I start by finding the best performing sectors using Prophet.net. Stocks in hot sectors have the support of their peers to fall back on. Then within those sectors I scroll through the charts and find the ones with consistent upward trends, and the less overhead resistance the better. Stocks making new highs don't have long term investors who bought at higher prices, and who will create selling pressure. I like stocks that are trending up consistently for days to months. Then I basically jump on board, either on a breakout to a new high, or on a small pullback during a long uptrend.
I also find stocks breaking out of a range, or breaking to a new high by checking Yahoo Finance each day for stocks rising on high volume, and stocks with the highest daily % gains. I look for high volume to confirm the breakout. I avoid stocks that trade under 100,000 shares per day, because I feel the prices are more easily manipulated. When a stock is moving up I like high short interest which increases the risk of a short squeeze.
Sometimes I write down all my long candidates in the evening before a trading day, along with resistance levels, rationale, my price targets, news, etc., and I rate them in terms of how good a play they are. I find doing that helps immensely because it organizes my thoughts and provides a plan for the next day. I find I really can't research and trade at the same time.
I usually try to avoid a stock if it's one or two days away from an earnings announcement or split because people sometimes "sell the news" and banking on earnings is taking a risk. If a stock is a few points from a recent high, I wait for it to clear the high before I jump in.
I always write down my target and stop loss prior to the trade. Sometimes I hold on longer than my target, buy I'll set tighter and tighter stops to protect my profit. I like to set tight stops, usually right below the low for the day or the day prior when I open a trade but never more than 5%. I look for the most recent "support", but if there isn't any, then I put my stop about 5% below my entry. My rule is never to lose more than 1 or 2% of my capital on any one trade. If it doesn't make money within a few days I get out. and I often get out if it doesn't go up as expected, even before it hits my stop (I really hate to lose money).
Once I'm long, and it's trending up, each day I reset my stops and try to move them up slightly, so I can lock in a profit, even if it's small. If I stop out, I figure thats just the price you pay for "insurance".
I briefly check the fundamentals but I give more weight to technicals. I like using candles sticks on 1 and 3 month charts to try and determine the next move. For longs I prefer companies that recently beat analysts estimates and have high earnings growth, etc.,..
When the market turns bearish, like it did last week, I immediately go to cash and look for short candidates. For me, there are 2 categories: Sectors that are weak (like tech and healthcare right now) and sectors that ran up so fast that they come crashing down (like metals, oil and coal right now, etc.,) I set tight stops on shorts (I won't lose more than 5% on a trade).
I traded on paper for months before starting with real money, and it really paid off. The books that helped me develop my style are
Swing Trading, Power Stratagies to Cut Risk and Boost Profits by Jon Markman and
Rule the Freakin' Markets by Micheal Parness.
