An unusual day. No symbols made it past my first round of analysis. Of those that passed the odds test, all failed, primarily because they are within 30 days of earnings, or because they are bear signals that don't have options available for trading. The one potential trade is on my supplemental list, which is exempt from the odds test. The details:
Of 3,961 stocks and exchange-traded funds in my analytical universe, 84 mid- and large-cap symbols that are traded on the major American stock exchanges broke beyond their 20-day price channels, 13 to the upside and 71 to the downside.
Sixty-five major-exchange small-cap symbols broke out, all to the downside.
Four over-the-counter symbols broke out, one to the upside and three to the downside.
No mid- or large-cap symbol traded on the major exchanges survived my initial screening.
No small-cap major-exchange symbol survived initial screening.
No symbols traded over the counter survived my initial screening.
One large-cap symbols survived screening for inclusion on the supplemental list of high-volume large-cap potential bear plays, having met the earnings exclusion test with sufficient open interest on its options, regardless of historical odds.
I shall do further analysis of the surviving symbols on Wednesday, July 16.
The lists are sorted in descending order by average yield.
Potential bull plays
Potential bear plays
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.
I then screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.
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.
-- Tim Bovee, Portland, Oregon, July 16, 2014
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.License
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Based on a work at www.timbovee.com.T