Wednesday, January 8, 2014

Wednesday's Prospects

On Tuesday, Jan. 7:

Of 3,450 stocks and exchange-traded funds in this week's analytical universe, 44 mid- and large-cap symbols that are traded on the major American stock exchanges broke beyond their 20-day price channels, 35 to the upside and nine to the downside.

Twenty-eight major-exchange small-cap symbols broke out, 21 to the upside and seven to the downside.

Six mid- and large-cap symbols traded over the counter broke out, four to the upside and two to the downside.

Nine mid- and large-cap symbols traded on the major exchanges survived my initial screening, seven having broken out to the upside and two to the downside.

The upside breakouts, sorted in descending order by average yield, are NUVA, LOPE, RGR, TDC, SPLK, CI and NCR. The downside breakouts are FI and GME.

Six small-cap major-exchange symbols survived initial screening, five having broken out to the upside and one to the downside. The upside breakouts are GKNT, ENPH, NVDQ, JBT and ENOC. The downside breakout is DNDN.

Two symbols traded over the counter survived my initial screening, both having broken out to the upside. They are SCHYY and REPYY.

The next round of earnings begins on Jan. 9, with the announcement by AA, coming within the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement. This means that increasing numbers of symbols will be removed from my prospective trades list during initial screening.

I shall do further analysis on Wednesday, Jan. 8.


The symbols are sorted into three groups and all have analyst coverage through the stock-ranking company Zacks. The groups are:
  • mid- and large-cap stocks as well as selected exchange-traded funds listed on major exchanges,
  • small-cap stocks on major exchanges,
  • mid- and large-cap over-the-counter stocks.
The small-cap group is further selected to ensure a minimum market capitalization of $1 million and a Zacks ranking of neutral or more bullish. (Small-cap stocks rarely have sufficient liquidity to allow a bear trade.)

I then screen the symbols for historical odds of a profitable signal in the direction of the breakout since May 22, 2013. That date is when the uptrend from October 2011 on the S&P 500 chart concluded the middle portion of its rise, prior to a correction and then a final push to the upside. In Elliott wave terms, it is the end of wave 3 to the upside, and the index is presently in wave 5.

If the odds of success are greater than 50%, I next screen for the absence of an earnings announcement within the next 30 days.

For bear signals, I also screen 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. Symbols that are too illiquid for a bear trade are removed from consideration.

I sort by the results in descending order by the average yield on signals in the direction of the breakout in preparation for the second round of analysis after the opening bell.


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

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

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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