Wednesday, May 5, 2010

5/5 Scan

Today's scan shows the extent to which market participants have been moving in lockstep, like lemmings rushing down the slipperly slope on the verge of the cliff, only to have second thoughts and attempt to put on the brakes.

That's a long way of saying: Many signals; none meet my rules.

The scan covered all optionable stocks and exchange-traded funds priced at $5 or more having traded 1 million shares or more at about 12:30 p.m. Eastern and  showing a phase switch on the parabolic sar (psar). I immediately eliminate those with earnings announcements in the next weeks.

Next, I apply the rules. Stocks with low (below 20) or marginal (below 30) average directional index (adx) readings are disqualified. If the adx is 30 more, the signal must be in line with the broader trend as it shows on the three-month daily chart. Counter-trend signals don't make the cut.

There were very few bull signals, only two, in fact. Both CHRS and SCO are weakly trending stocks, with adx readings.

There were many bear signals.

Counter-trend bear signals with adx readings of 30 more: AAPL, CDNS, EECL, HST, ITMN, IYR, MAR, MCD, NKE, NSC, NWL, PEI, RF, SPF, SPN, TOL, URE, WYNN and ZQK.

Bear signals with low or marginal adx readings: AEP, AMB, AMTD, AMX, AUD, BA, BBD, BKX, BSX, BWA, CBE, CBG, CMS, CNX, CX, DBC, ECA, FITB, GFA, HL, HMA, IBB, KBE, LCC, LNE, MET, MS, MTH, NG, OMC, OXY, PBT, RFMD, RSG, RVBD, SBUX, SYM, TEN, TEX, TXT, UCD, USO, WAG, WFT, XLU, XLV, XOP and XRX.

Today so far

The Investor's Guide to Active Asset Allocation: Using Technical Analysis and ETFs to Trade the Markets

Martin Pring's detailed deconstruction of the economic cycle: What sorts stocks to look for at each stage of the recovery. A masterful analysis.



Abbreviations:
psar - Parabolic Stop and Reverse
adx - Average Directional Index


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