Thursday, May 8, 2014

Thursday's Prospects

On Wednesday, May 7:

Of 3,869 stocks and exchange-traded funds in this week's analytical universe, 82 mid- and large-cap symbols that are traded on the major American stock exchanges broke beyond their 20-day price channels, 50 to the upside and 32 to the downside.

Forty-three major-exchange small-cap symbols broke out, six to the upside and 37 to the downside.

Eight over-the-counter symbols broke out, four in either direction.

Nine mid- or large-cap symbols traded on the major exchanges survived my initial screening, eight having broken out to the upside and one, NG, to the downside. In descending order by average gain, the upside breakouts are PZE, HRS, GPK, MOG.A, CACQ, AON, CR and DD.

No small-cap major-exchange symbols survived initial screening.

No symbols traded over the counter survived my initial screening.

Two large-cap symbols survived screening for inclusion on the supplemental list of high-volume large-cap potential bear plays, each having met the earnings exclusion test with sufficient open interest on its options, regardless of historical odds. They are F and BX.

I shall do further analysis of the surviving symbols on Thursday, May 8.

The next round of earnings began April 8 with the announcement by AA. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, increasing numbers of symbols will be removed from my prospective trades list during initial screening.


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 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 because of the presence of options.

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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