This final phase is where I take a more detailed look at the chart and factor in the fundamentals in an effort to choose one symbol for analysis.
The four all produced bull signals.
Three, from the mid-/large-cap list, are rated neutral by Zacks Investment Research, the service I use to short-cut my fundamental analysis. None has liquid options, nor do any have high dividend yields.
The main distinguishing mark is the price implied by growth estimates. Two, LYV and INT, are selling at more than triple the price implied by the estimates. One, CSTE, is only 25% above the estimate.
The fourth symbol, MERC, is from the small-cap list and has a bullish rating from Zacks. Most interestingly, the stock is selling for only 15% of the price implied by growth estimates, a steep discount.
A position on any of these stocks will be as long shares, since the options have low open interest, so it pays to look at them under my longer-term rules. I very much prefer the leverage options bring when constructing a shorter-term speculation.
MERC, extremely underpriced and with a bullish rating, seems most interesting in that respect. I intend to write an analysis of MERC as a potential longer-term bull play and shall post it prior to the closing bell today.
Outside of the final four, five symbols failed confirmation or were moving contrary to the signal. One has been trading for less than a year and so fails a requirement written into my rules. Six had charts that were contrary to the signal -- a bull signal within a bearish chart, for example.
A full list of first-round survivors may be found in "Tuesday's Prospects", posted today prior to the opening bell.
-- Tim Bovee, Portland, Oregon, July 1, 2014
My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.
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 decisions for his or her own account, and take responsibility for the consequences.License
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Based on a work at www.timbovee.com.