Sunday, March 23, 2014

Monday's Prospects

On Friday, March 21:

Of 3,861 stocks and exchange-traded funds in this week's analytical universe, 81 mid- and large-cap symbols that are traded on the major American stock exchanges broke beyond their 20-day price channels, 26 to the upside and 55 to the downside.

Forty-six major-exchange small-cap symbols broke out, 13 to the upside and 33 to the downside.

Six over-the-counter symbols broke out, three in either direction.

Four mid- or large-cap symbols traded on the major exchanges survived my initial screening, all having broken out to the upside. They are XEC, CWT, EIX and DPM.

Six small-cap major-exchange symbols survived initial screening, two having broken out to the upside and four to the downside. The upside breakouts are AKS and PCTI. The downside breakouts are VGZ, DSCI, ENT and CYNO.

No symbols traded over the counter survived my initial screening.

Five large-cap symbols with high volume broke out to the downside, met the earnings exclusion test and had sufficient liquidity for a bear play, regardless of historical odds analysis. They are NKE, LLY, MRK, DTV and BMY.

I shall do further analysis of the surviving symbols on Monday, March 24.


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 June 24, 2013. That date is when the present uptrend on the S&P 500 chart began. In Elliott wave terms, it is wave 5 to the upside.

If the odds of success are 50% or greater, 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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