3 Stocks on Fire new portfolio - strategy and discussion

[tokyopua]

Hi all,

Just thought that it might be nice to have a thread where we can do some discussion when the market is CLOSED.  Not to expect that David would post here, he needs a break after the intense analsyis he does all day! 

But rather, I think we can discuss the philosophy that David uses to make picks, share ideas we might have for pre market buys, or current picks, etc.   

The idea behind the new portfolio is to learn the methodology since it can be hard to follow each trade tick for tick.  So this thread can be a place where we can work on that.

Also its a place where we can avoid some of the noise of the random posters who hit the new portfolio and have high bandwidth discussion.

If nothing else, its a way to pass the time for those of us who are addicted to the rush of the new portfolio until the market is OPEN again     Kind of like the "linoleum floor" Cramer is always referring to where he supposedly drinks cheap scotch until the next lightning round lol. 

I am thinking to start off with a post in here about how I am doing intraday scans if anyone is interested.

[David Randolph]

(I'm interested )

[nullzero]

Sounds like a good idea  . I was curious anyone use trade ideas as their real time scanner? If so what settings do you use,?

Also any tips on finding a good stock fundamentally using the various ratios, for instance a sweet spot with the following ratios;

PEG Ratio
RoE
Price/Book ratio
Total Debt/Equity ratio
EPS
P/E ratio
etc.

[lancefur]

Since I became a premium member and have become increasingly active with trading, I have noticed a certain rush and addicition to the portfolio. I certainly hope this is normal? 

I am doing my best to understand how things are done but when picks are discussed on these boards and I want to ride a good swing, it seems already to late for me to catch it since i can never quite tell when that is about to happen. I am sure some of it's luck. I have seen some out here have a Top 50 they watch. Seems to me that is too many but a list of stocks they don't own or are already being covered by David. Check these out and watch them for sometime. For instance, the previous 3SOF. I see many speculators watching these things and it would be nice to know how one can tell if they are in or not. I suppose it's a gamble for the swing traders but if I could ride a few short bursts of those 5-6% or even a 30-40%, how awesome would that be.

I am extremely interested in hearing other traders strategies out here so I can learn even more. I learn something new everyday and everyday I become a better trader. Thanks for creating this post!

[tokyopua]

(I'm interested )

Heh, OK David, I would be glad to share what little I know so far, this is somewhat new to me.

Intraday Scanning

First let me say that I have only been doing this since David started the new portfolio.  I  had previously been doing occasional scans after market close using stockfetcher.com (which was suggested to me by Terliso).  So I am no expert here, just thought I would share my experiences and hopefully also get some ideas.

The cool thing about stockfetcher.com was that once you got a list, you could easily and quickly scroll through quick charts of the stocks that came up, so that is nice.  However, I wasn't able to get intraday scans, so I switched to stockcharts.com.

The nice thing about doing intraday scans is that you have a chance of catching news as it happens that day based on the volume spikes.  But I have to say so far I am not fully happy with the result format that I get from stockcharts.com.  You just get a list that doesn't even tell you how much the stock is up in percentage terms, and then if you want to see a chart of the stock it opens a whole new window that takes a long time to come up.

OK, all that being said, here is the scan I have been using:

[type = stock] and [country = us]
and [Close > 0.01] and [Close < 30]
and [Close > [1.05*yesterday's close]]
and [volume > daily sma(100,daily volume)*0.2]
and [SMA(20,close) * SMA(20,volume) > 500000]
and [market cap < 500]
and [volume > 100000]

Line 1 basically makes sure it's a US stock, line 2 might not be needed, but its making sure the stock is not a sub penny, and not more than $30.  This might not be necessary since later I constrain market cap...

Line 3 basically looks for stocks that are up 5% from yesterday's close.  I first had 5% > than the open, but kept getting stocks that had gapped down on the open but had recovered somewhat, and these seldom were on fire.  I put the 1.05 in bold, because if I get to many results, I sometimes up this to 6, 7, 8, 9 etc. to find stocks that rose even more than just 5%.

Line 4 basically is checking how much volume the stock has traded so far compared to its volume moving average over the last 100 days.  I bolded the 0.2 because I also change this a lot as the day goes on.  15 minutes into the trading session is about the earliest it seems I can start scanning, and by then I expect a stock on fire or potentially on fire should have at least 20% of its average volume traded already.  Again, if I get too many results I might up this threshold to 30%, etc.  I keep upping this number as the day goes on, and by mid day I have usually set this to be greater than 1 (i.e. greater than 100%), and so on.

Line 5 tries to constrain liquidity, as I don't want to get into a stock I cant get out of the next day, even if today it is on fire.  I could add a line to ensure I meet David's criteria of $500,000 traded that would look like "and [[volume*close]>500000]".

Line 6 looks for stocks will market capitalization less than 500 million which is also one of David's criteria.  Actually I often up this to 1000 million for my own purposes, but I won't recommend stocks above 500 million to David unless I was really compelled to do so by the story.

Line 7 might not be necessary, but allows me to cut out the low volume stocks also.

OK, so that is the scan, would welcome input.

The next question I am dealing with is what to check first among the results.  I have been exporting them to Excel to see which ones had the biggest gain and starting there (again, weak interface on stockcharts.com).  Or sometimes I start with the largest volume moves, but that can be deceptive as the penny stocks get big volume.  I just thought now that I could add a line to maybe search for stocks that have traded a certain percentage of their market cap, that would probably rock!

OK, once I have a stock, I usually check its 3 minute chart on Etrade Pro and see if the chart looks good.  So far the ones with steady uptrends seem to keep up that trend, but the ones with a big spike then a drop are hard to predict.

Now its time to check the fundamentals.  Here I might make a new post later, but I am trying to still determine what to check first so that I can start with most important to least important.  So far I tend to start with the news if there is any.  I like to see news with numbers in it as opposed to news without numbers.  Then I check the balance sheet, and if its negative and a significant negative percentage of the market cap I will often skip it.  If its positive I check current ratio, and if that is greater than 1.5 or so I keep going to check income trends, etc.  to see if there is increased revenue growth annually, then quarterly.  After this I will check EPS trends, etc.

This fundamentals check is the part I need the most work on, still learning!

OK, enough for now, comments welcome.  I am interested in particular if anyone use other platforms for intraday scans, etc.

[Terliso]

Intraday Scanning

The cool thing about stockfetcher.com was that once you got a list, you could easily and quickly scroll through quick charts of the stocks that came up, so that is nice.  However, I wasn't able to get intraday scans, so I switched to stockcharts.com.

Intraday scanning is already available in www.stockfetcher.com. you better switch back there Tokyopua

[Terliso]

The beautiful thing about www.stockfetcher.com they have 30 day and 26 week high scanning button (obviously, 30 day & 26 week high comes first before 52 week high) that means you will be able to catch stocks in the beginning of the rally... more profits!  

[tokyopua]

Intraday Scanning

The cool thing about stockfetcher.com was that once you got a list, you could easily and quickly scroll through quick charts of the stocks that came up, so that is nice.  However, I wasn't able to get intraday scans, so I switched to stockcharts.com.

Intraday scanning is already available in www.stockfetcher.com. you better switch back there Tokyopua

Lol, wow I dont know how I missed that.  It was cheaper and it was cool that I could see the charts.  Do they show you intraday charts on the stocks you scan?  Like say 3 or 5 minute charts?  Stockcharts.com will do that, but again the problem is it has to pop up a separate window for each. 

The other problem I thought I had with stockfetcher was trying to put bounds on certain searches like checking for moving averages close to each other.  For example Quasi came up with a way to check for your T3ML cirteria, but it seemed hard to me to do that in stockfetcher.  Anyway, I will check it again, its about $20 cheaper per month than stockcharts.com...

[tokyopua]

Intraday Scanning

The cool thing about stockfetcher.com was that once you got a list, you could easily and quickly scroll through quick charts of the stocks that came up, so that is nice.  However, I wasn't able to get intraday scans, so I switched to stockcharts.com.

Intraday scanning is already available in www.stockfetcher.com. you better switch back there Tokyopua

Lol, wow I dont know how I missed that.  It was cheaper and it was cool that I could see the charts.  Do they show you intraday charts on the stocks you scan?  Like say 3 or 5 minute charts?  Stockcharts.com will do that, but again the problem is it has to pop up a separate window for each. 

The other problem I thought I had with stockfetcher was trying to put bounds on certain searches like checking for moving averages close to each other.  For example Quasi came up with a way to check for your T3ML cirteria, but it seemed hard to me to do that in stockfetcher.  Anyway, I will check it again, its about $20 cheaper per month than stockcharts.com...

OK, took a look at the stockfetcher manual, its really detailed and I see that I could put bounds on things using mathematical operations.  I didnt realize it becuase I never saw such expressions in their public scans.  In fact, they seem to only use words like 'multiplied by' and 'divided by' instead of the common symbols like * and /, which is kind of strange, but I can learn to live with that. 

My final question I need to figure out is how often stockcharts.com update their intraday data.  Stockfetcher says they do it only every 15 minutes.  I am not sure about stockcharts.com, seems like they update more often because I see things in the dropdown like "last intraday update 9:52 AM"...

[tokyopua]

Intraday Scanning

The cool thing about stockfetcher.com was that once you got a list, you could easily and quickly scroll through quick charts of the stocks that came up, so that is nice.  However, I wasn't able to get intraday scans, so I switched to stockcharts.com.

Intraday scanning is already available in www.stockfetcher.com. you better switch back there Tokyopua

Lol, wow I dont know how I missed that.  It was cheaper and it was cool that I could see the charts.  Do they show you intraday charts on the stocks you scan?  Like say 3 or 5 minute charts?  Stockcharts.com will do that, but again the problem is it has to pop up a separate window for each. 

The other problem I thought I had with stockfetcher was trying to put bounds on certain searches like checking for moving averages close to each other.  For example Quasi came up with a way to check for your T3ML cirteria, but it seemed hard to me to do that in stockfetcher.  Anyway, I will check it again, its about $20 cheaper per month than stockcharts.com...

OK, took a look at the stockfetcher manual, its really detailed and I see that I could put bounds on things using mathematical operations.  I didnt realize it becuase I never saw such expressions in their public scans.  In fact, they seem to only use words like 'multiplied by' and 'divided by' instead of the common symbols like * and /, which is kind of strange, but I can learn to live with that. 

My final question I need to figure out is how often stockcharts.com update their intraday data.  Stockfetcher says they do it only every 15 minutes.  I am not sure about stockcharts.com, seems like they update more often because I see things in the dropdown like "last intraday update 9:52 AM"...

Quasi let me know how to see multiple charts and how to apply formats to all of them in stockcharts.com, so its much better than I thought.  I am actually thinking about getting subscriptions to both for awhile. 

Also wondering if anyone uses anything else, and what your experience has been?  And does anyone scan for stocks that are breaking down and would be good short candidates?  (Seems like that may come in handy more and more soon...)

[tokyopua]

Is anybody using eSignal for real time scanning?

[Sterlis]

I use and have been very happy with Prophet.net real time scanning and charting. Solid tool.

[tokyopua]

Thanks for your input on this Sterlis 

So far looks like we have realtime scanning at:

www.stockcharts.com
www.prophet.net
www.stockfetcher.com

and maybe www.esignal.com, though I dont know much about it.

I did play around with trying to figure out how often stockcharts.com updates its scan data.  Seems like it varied, usually between 7 to 9 minutes over the period of about an hour that I was checking.  That is better than what stockfetcher.com advertises at 15 minutes, though maybe the actual updates are quicker, I dont know.

What stockfetcher has going for it is that its cheap, and it has a pdf manual that you can dowload that is SUPER detailed.  Plus they have a forum where you can ask questoins and request new features.  I think that in terms of customization and overall possible features, stockfetcher is in the lead.

However, if you think you want just a basic volume/price/market cap/basic indicator scan that updates fairly quickly, then it might be worth the extra cost to go with stockcharts.com.

Still trying to get more experience, but that is my take so far.