Saturday, June 1, 2013

Monday's Prospects

On Friday, May 31:

Of 2,309 stocks and exchange-traded funds in this week's analytical universe, 153 that are traded on the major American stock exchanges broke beyond their 20-day price channels, three to the upside and 150 to the downside.

In addition, 27 that are traded over the counter broke out, one to the upside and 26 to the downside.

Within my analytical universe, 7.8% of symbols gave bull or bear signals, down from 2.7% the prior trading day.

The ratio of bull to bear signals is 1:44.0 (one to forty-four is correct, not a typo), compared to 1:1.4 the prior trading day, showing a strongly bearish bias to the market. My cut-off point for bullish bias is 2:1 or greater, and for bearish bias, 1:2 or smaller.

None of the major-exchange symbols survived my initial screening, almost entirely because of less than even odds of success and low yields adjusted by the odds.

None of the over-the-counter symbols survived my initial screening.

I'll do further analysis on the survivors that confirm their signals by trading beyond their breakout levels on Monday, June 3.

Uh, well, no survivors so no analysis on Monday. I won't be opening any new positions on Monday.

The symbols I cover are mid- and large-cap stocks having analyst coverage, as well as selected exchange-traded funds. I screened them for
  • the odds of a successful trades in the direction of the breakout since the present uptrend began on the S&P 500 weekly chart, on Oct. 4, 2011,
  • a yield adjusted by those odds of 5% or greater,
  • and absence of an earnings announcement within the next 30 days. 
For bear signals, I also screened to ensure the ability to do a trade, either because of the presence of options or sufficient liquidity to allow for short sale.

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