Wednesday's Prospects

On Tuesday, Oct. 8:

Of 2,383 stocks and exchange-traded funds in this week's analytical universe, 247 that are traded on the major American stock exchanges broke beyond their 20-day price channels, five to the upside and 242 to the downside.

Seventeen symbols traded over the counter broke out, one to the upside and 16 to the downside.

Within my analytical universe, 11.1% of symbols gave bull or bear signals, compared to 2.8% the prior trading day. It is the highest breakout level since Aug. 27, when 13.2% of symbols gave bull or bear signals.

The ratio of bull to bear signals was 1:43, compared to 1:15.8 the prior trading day, as the markets strengthened their bearish bias. It is the most bearish day since Aug. 27, when the ratio stood at 1:60.2.

Eight symbol traded on the major exchanges survived my initial screening, one to the upside, RNF, and seven to the downside: BBY, GLNG, GRPN, IOC, JOY, LOCK and TCK.

No symbols traded over the counter survived my initial screening.

Earnings season began Oct. 8. The exclusion rule in my trading plan forbids me from opening new positions in stocks within 30 days of an earnings announcement. This means that many symbols are being removed from my prospective trades list during initial screening.

I shall do further analysis on Wednesday, Oct. 9.

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...

• even or greater 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,
• an average yield of 3% or greater in the direction of the breakout,
• 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.