On Thursday, Sept. 11:
Of 3,945 stocks and exchange-traded funds in my analytical universe, 63 mid- and large-cap symbols that are traded on the major American stock exchanges broke beyond their 20-day price channels, 29 to the upside and 34 to the downside.
Thirty-one major-exchange small-cap symbols broke out, 20 to the upside and 11 to the downside.
Sixteen over-the-counter symbols broke out, two to the upside and 14 to the downside.
Fourteen mid- or large-cap symbols traded on the major exchanges survived my initial screening, eight having broken out to the upside and six to the downside. Two symbols, both having broken out to the downside, are subject to special confirmation rules due to earnings and dividends.
Three small-cap major-exchange symbols survived, all having broken out to the upside.
No symbols traded over the counter survived.
No 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.
One symbol survived screening as a potential bull play from my supplemental list of innovative companies.
I shall do further analysis of the surviving symbols on Friday, Sept. 12.
The lists are sorted in descending order by average yield. Regular rules means that confirmation will require trading above the 20-day price channel breakout level.
Potential bull plays
| Mid-, large- cap
|
Small-cap
|
OTC
|
Innovators supplemental
|
Potential bear plays
| Mid-, large- cap
|
Small-cap
|
OTC
|
Large-cap supplemental
|
First-round survivors: Earnings or dividend rules
The lists are sorted in descending order by average yield. Rules for a breakout immediately following an earnings announcement require that confirmation on the following trading day, Reset Day, require that the price be beyond the Reset-Day 20-day price channel. A breakout following a stock going ex-dividend must be confirmed on the fifth trading day after ex-dividend day.
Potential bull plays
| Mid-, large- cap
|
Small-cap
|
OTC
|
Innovators supplemental
|
Potential bear plays
| Mid-, large- cap
|
Small-cap
|
OTC
|
Large-cap supplemental
|
Methodology
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.
For symbols whose 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, without yet passing judgment on whether those options are liquid enough to support a trade.
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, Sept. 12, 2014
References
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.
Disclaimer
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
All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at www.timbovee.com.T
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