No Time For Scans? Try This
For a market that can’t put together any kind of decent
rally, it sure is having a tough time selling off. Or maybe it’s “for a market
that refuses to sell off, it sure is have a tough time trying to rallyâ€. I’m
not sure, but I do know this…there hasn’t been any real conviction for over two
weeks now. Bulls want to see prices go up, bears want to see prices go down,
and turtles want to see prices go somewhere. Right now none of them are happy.Â
So you want me to tell you which way the next real move will be? My guess is
still down. I’m seeing a lot more negatives than positives . As I normally do
at the end of each month, I will detail it all for you in Wednesday’s column.Â
Today I want to talk about research short-cuts.
One of the most important aspects of trading is research.Â
Once a trader has a system or methodology then execution of that system should
become nearly automatic. The tedious part for many traders is finding stocks
that meet the required criteria for their methods.  Traders run scans, flip
through charts and look for ideas any numbers of places. I believe my weekend
and nightly research is the most vital part of my success. My weekend research
typically takes me 4-8 hours each weekend from start to finish depending on the
market conditions. People who think I trade from 9:30-4 and then am done for
the day simply do not understand what I do. I like to say that although I trade
during the day, I make my most of my money at night and on the weekend when
conducting my research.
So what happens when I simply don’t have time to do all my
research?
This weekend I moved. Actually it began last week and
hasn’t nearly finished yet. I’m pretty sure I’ll be unpacking boxes until Labor
Day. Basically from 4pm Friday until late last night I was on the move just
about every minute. (Sleep was minimal.) Needless to say, I did not have the 5
hours or so I would normally like to devote to my research. So how do I
condense it without cheating myself?
The scans I run each weekend are basically done to help me
identify high EPS/RS stocks for purchasing and low EPS/RS stocks for shorting.Â
This weekend my High EPS/RS scan produced about 550 stocks to look at. (During
better times this number is normally about double.)Â Under normal circumstances
I prefer to look at the charts of every stock in the list. I believe going
through a large number of charts like that helps me get a good feel for what is
happening in the market. Since this wasn’t possible this weekend I filtered the
list using the filter I typically use mid-week.Â
^next^
Here are the filters:
Stock must be X% from 52 week high — Since I normally look to buy stocks
that are at or near new highs, this will filter out any stocks that aren’t close
to hitting new highs. (I normally think 15-20% is a reasonable number to use
here.)
Stock must be X% from 30-day high — Same logic as above, but I tighten
the percentage for the shorter-term. I don’t like buying stocks that explode
from the bottom of their base or have very deep handles, so this eliminates some
of them.
No new highs for X days — I normally buy stocks as they emerge from bases
of at least 4-weeks. I also sometimes buy stocks that are experiencing a
pullback. By ruling out stocks that have made a new high very recently, I am
making sure I don’t waste time looking at stocks that are already extended.
After running my filters, the list of stocks I had to go
through was reduced from 550 to about 125 — a number I could easily flip through
and research fairly quickly.  While I wouldn’t want to take such short-cuts all
the time, they come in very handy when time is tight. Most traders should be
able to implement similar short-cuts when conducting their research.
Best of luck with your trading. Please note the new email
address.
Rob