Wednesday's Prospects

On Tuesday, Aug. 27:

Of 2,319 stocks and exchange-traded funds in this week's analytical universe, 265 that are traded on the major American stock exchanges broke beyond their 20-day price channels, four to the upside and 261 to the downside.

Forty-one symbols traded over the counter broke out, one to the upside and 40 to the downside.

Within my analytical universe, 13.9% of symbols gave bull or bear signals, up sharply from 0.9% the prior trading day. The last double-digit wave of breakouts was 10.3% on Aug. 15.

The ratio of bull to bear signals was 1:60.2, pushing the markets sharply into bear territory after the neutrality of the prior trading day's 1:1.9 ratio. The ratio was the most bearish since Aug. 19, when it came in at  1:110.

Seven symbols traded on the major exchanges survived my initial screening, all having broken out to the downside. They are CPWR, FMER, HSP, IGTE, MSTR, TDC and WCRX.

No symbols traded over the counter survived my initial screening. Three had sufficient odds and yield to meet my tests, but they were all bearish and lacked options and sufficient liquidity and so are cannot be traded to the bear side.

I shall do further analysis on Wednesday, Aug. 28.

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.

References

My trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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