Saturday, June 22, 2013

Monday's Prospects

On Friday, June 21:

Of 2,289 stocks and exchange-traded funds in this week's analytical universe, 96 that are traded on the major American stock exchanges broke beyond their 20-day price channels, eight to the upside and 88 to the downside.

In addition, 12 that are traded over the counter broke out, all to the downside.

Within my analytical universe, 4.7% of symbols gave bull or bear signals, down from 11.3% the prior trading day. It is the highest percentage since June 5, when 11% gave signals. (Note that the prior-day percentage has been corrected. See "Friday's Prospects".)

The ratio of bull to bear signals is 1:13, compared to 1:43 the prior trading day, a weakening of the bearish bias in the markets.

Two of the major-exchange symbols survived my initial screening, one having broken out in each direction. They are PBYI to the upside and ODP to the downside.

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

All but four of the 96 major-exchange breakouts failed because their odds of a profitable trade during the present S&P 500 trend were less than even. I interpret this to mean that a lot of stocks were moving in unaccustomed directions, since it takes time within a trend to produce winning odds.

I'll do further analysis on the survivors that confirm their signals by trading beyond their breakout levels on Monday, June 24.

The symbols I'm analyzing 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 whatever their open interest or sufficient volume to allow for the short sale of shares.

My cut-off point for bullish bias is a ratio of bull to bear signals of 2:1 or greater, and for bearish bias, 1:2 or smaller, rounded to the nearest whole number.

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