Monday's Prospects

On Friday, Sept. 12:

Of 3,962 stocks and exchange-traded funds in my analytical universe, 229 mid- and large-cap symbols that are traded on the major American stock exchanges broke beyond their 20-day price channels, 24 to the upside and 205 to the downside.

Sixty-three major-exchange small-cap symbols broke out, 11 to the upside and 52 to the downside.

Ten over-the-counter symbols broke out, three to the upside and seven to the downside.

Twenty-two mid- or large-cap symbols traded on the major exchanges survived my initial screening, five having broken out to the upside and 17 to the downside.

Five small-cap major-exchange symbols survived, two having broken out to the upside and three to the downside.

One symbol traded over the counter survived, having broken out to the upside.

Five 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.

No symbols survived screening as a potential bull play from my supplemental list of innovative companies.

I shall do further analysis of the surviving symbols on Monday, Sept. 15.

First-round survivors: Regular rules

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 SCTY BMA BFR BPFH NPBC

Small-cap NPTN PGI

OTC UBSFY

Innovators supplemental (none)

Potential bear plays

Mid-, large- cap TRLA EJ HCN SSS INCY NE GRT WRE DRE OSK MAN BTE CUZ ATR DFT HPT NTT

Small-cap YRCW AKBA LXU

OTC (none)

Large-cap supplemental NLY KMI ARCP AES WMB

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 (none)

Small-cap (none)

OTC (none)

Innovators supplemental (none)

Potential bear plays

Mid-, large- cap (none)

Small-cap (none)

OTC (none)

Large-cap supplemental (none)

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.

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 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. 14, 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