Of 1,343 stocks and exchange-traded funds in my analytical universe, 28 broke beyond their 20-day price channels, 20 to the upside and eight to the downside.
Four symbols survived initial screening, two having broken out in either direction. One, a bear signal, broke out immediately after earnings were announced and so falls under my Reset Day rules (see below).
No symbols appearing on my supplemental list of innovative companies gave bull signals.
I shall do further analysis on Friday, Nov. 21.
The next earnings season begins Jan. 8 with the announcement by AA and runs six weeks. There will be occasional earnings announcements outside of the season that will be subject to the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement.
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.
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.
The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.
I 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, Nov. 21, 2014
My shorter-term 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.Tss