Tuesday, September 16, 2014

Revised Analytical Universe

I've noticed a pattern in my analysis.

Very few trades result from among the small-cap stocks and the less liquid of the mid-caps. I can't recall any trade ever coming out of my analysis of over-the-counter symbols.

Nearly all of the trades worth taking are from stocks with volume running 500,000 shares a day or greater, and with a price of $15 and up. These are the stocks that traders are interested in, and therefore the ones most likely to have some price movement, a necessity for anyone hoping to turn a profit.

It's time for a reboot.

I'm adjusting my analytical universe to match those facts. There's no point in wading through symbols that have no hope of producing a trade.

I began the week with a universe of 3,962 symbols. I'm reducing the number, beginning today, to 1,113 stocks and exchange-traded funds.

My selection criteria are these:
  • The stocks have these characteristics:
    • Covered by Zacks Investment Research, a service I use to speed my analysis of the fundamentals and also to get a feel for Street opinion
    • Traded on a major exchange (NYSE, NASDAQ or AMEX)
    • Priced $15 or greater
    • Average volume of 500,000 or greater
    • Market cap of $1 billion or greater, which means they are mid-cap and large-cap issues
  • The exchange-traded funds are a selection of the most liquid funds, whether or not they are covered by Zacks.
Of this week's revised universe, 1,035 symbols and stocks and 78 are funds.

-- Tim Bovee, Portland, Oregon, Sept. 16, 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.

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Based on a work at www.timbovee.com.

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