Profiting From TradingMarkets: 7 Steps To Creating Your Nightly Watchlist
Creating a watchlist is
an important part of any swing trader’s nightly work. At
TradingMarkets, we make assembling your watchlist easy. Use a “tops down”
approach in your nightly work, i.e. market, sector, stocks. Let’s see how
this works…
Market
Since 70% of a stock’s move is due to the overall market, you want make sure
you’re on the right side of it. Start out at the
Market Bias Page. Pay particular attention to the CVR signals. The CVR
3 is the most powerful, in my opinion, and if you see multiple signals in the
same direction, that simply adds strength. Now you have your market bias for the
following day.
Now take a look at the major indices — the S&P 500
(
SPX.X |
Quote |
Chart |
News |
PowerRating), the
Nasdaq
(
$COMPX |
Quote |
Chart |
News |
PowerRating), the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating). The Semis lead,
so look at them too
(
$SOX.X |
Quote |
Chart |
News |
PowerRating). Are we overbought or oversold? How many
consecutive up/down days are there? Are we near important swing points?
Are we near important Fib levels?
Sector
Next, look at the sector action. Try the
Top Sectors. 1 week and
Top Sectors, 1 month screens. You want to ultimately pick stocks that are in
strong sectors. Again, “a rising tide floats all boats,” so stick with the
strength. For instance, if the $SOX is a leading sector, you’ll want to focus on
stocks like Intel
(
INTC |
Quote |
Chart |
News |
PowerRating) and KLA-Tencor
(
KLAC |
Quote |
Chart |
News |
PowerRating), for
instance. If the homebuilders are strong, look for stocks in that sector —
stocks such as LEN, KBH, PHM CTX. Sector rotation is a real phenomenon, and a
quick glance will tell you where the strength and weakness is.
Stocks
Finally, stock selection. For the long side, try
the
Proprietary Momentum List and the
Pullbacks From Highs List. When picking a stock from a sector, try to focus
on the leader in the industry. In the semis, for instance, this would be Intel.
Look for swing highs and lows and your favorite setups. If you want to search
for particular parameters, take a look at the
TradingMarkets Stock Scanner.
With this in mind, here’s a sample checklist for
you:
1. Check the
Market Bias page to determine tomorrow’s likely direction.
       a. check not only the CVR signals but
the TRIN Thrust, McLellan Oscillator and Proprietary Momentum Indicator list.
2. Go to your charts and look for support/resistance, swing highs and
lows, Fib levels, etc. in the major indices.
3. Determine the strongest (or weakest for
shorts) sectors by going to the Top Sectors/ETFs/Bottom Sectors/ETFs area.
4. Find the best setups in individual
stocks using the
Proprietary Momentum List and the
Pullbacks From Highs List (for longs) and the
Proprietary Implosion List and
Pullbacks From Lows List for shorts. Scan for stocks using the
TradingMarkets Stock Scanner. Remember, stocks above the 200-day moving
average are higher-probability longs and stocks below the 200-day moving average
are higher-probability shorts. Simple three and four day pullbacks can be good
swing trades, especially pullbacks to the 20-day moving average. Stocks popping
out of a base on good volume and cup and handles are also good candidates. If
you’re a reversal player, look for island reversal bars and for higher
probability trades — 1,2,3s. A confluence of indicators coming together will
give you the highest probability trades.
5. Look for earnings and other news after the
close (and before the next day’s open, too).
6. Create your list. Put as many stocks on it as
you are comfortable with. but don’t make it too large or it will be cumbersome.
You can set your charts up to scroll your watchlist during the trading day.
Write down potential entry points and the reasons why the stock is on your list.
You may not trade it the next day but three days from now it’s got a fantastic
setup.
7. Go over your existing list each night and add and delete stocks as necessary.
Delete a stock if the setup falls apart or the premise for the trade changes.
No matter how good your watchlist is, it seems
that something interesting always comes up during the trading day. You may find
something that looks great, but it wasn’t on your watchlist. That’s OK, too. Just
make sure there’s a setup that’s got something going for it — don’t just trade
it because it’s the “stock du jour.”
If you have any questions about your nightly
checklist, feel free to e-mail me at brice@tradingmarkets.com.
Brice Wightman