Thursday, April 4, 2013

Thursday's Breakouts

Thursday, April 4:

Of 2,399 stocks and exchange-traded funds in this week's analytical universe, 33 that are traded on the major American stock exchanges broke beyond their 20-day price channels, 11 to the upside and 22 to the downside.

Four survived my initial screens. In descending volume order, they are EMXX, UPI, IIT and FOL. All are bear signals with the exception of IIT.

Bear plays have a limitation: They can only be made with stocks that have options with reasonably high open interest or with stocks having sufficiently high volume for a short sale.

I normally wait until the day after the breakout to analyze whether symbols can in fact be traded, but here is a preview:

None of the three bear symbols have options with sufficient liquidity for trading under my rules, and their volume is too low for short selling the shares.

I'll look at the bull symbol, IIT, on Friday if it is confirmed in Friday's trading. But it has an average daily volume of 1,430 shares, no options and an 11% bid/ask spread on shares of the stock, so I'm extremely unlikely to open a position.

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