Of 488 large-cap stocks and exchange-traded funds in my analytical universe, 56 broke beyond their 20-day price channels, all to the upside.
No symbols giving trading signals with high odds of success survived initial screening. High-odds symbols are candidates for directional trades.
One symbol with a trading signal having low odds of success survived initial screening, having broken out to the upside. Low-odds symbols are candidates for non-directional trades.
There are two prospects for trades coinciding with an earnings announcements.
I shall do further analysis on Tuesday, Oct. 6.
The next earnings season begins Oct. 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my entered to coincide with earnings announcements.
Trading signal survivors
High-odds Bull
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High-odds Bear
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Low-odds Bull
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Low-odds Bear
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Potential trades keyed to events
The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm".
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Methodology
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 in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade; presently the NOV options, trading for the last time on Nov. 20. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.
-- Tim Bovee, Portland, Oregon, Oct. 5, 2015
References
Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.
Alerts
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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.Tss s ss'ss
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