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Steve,
Yeah, that's pretty much the $100,000 question. There are probably as
many different methods as there are traders. One thing you might
consider first is your "universe of stocks". Many traders prefer high
liquidity. For instance I like to have at least 100K average daily
vol (50d), some prefer 300K, some 500K or even more. I prefer stocks
over $10, preferably $20, but others trade penny stocks and do fine.
You might consider professional sponsorship. Stocks tend to move
better if the pro's are buying. You could limit yourself to stocks in
the S&P 500, Naz 100, R2K, semi's, just tech, whatever.
Another way is to combine fundamental and technical analysis. Find
sectors/groups w/strong fundamentals that haven't yet taken off and
then apply TA to get a good entry point. MultexInvestor.com has some
excellent screens for these kind of plays. William O'Neil's CANSLIM
strategy also utilizes the FA/TA combo.
Once you've setup your universe of stocks there are all kinds of
scans. I'm sure lots of members here have there own favs. A very
popular method w/a lot of traders and a good starting point is simple
Relative Strength. You might start w/a scan of the S&P groups for
instance, to find those that are outperforming the rest of the
market. Then find the best stocks in those groups or those that look
to have future potential which may be late-bloomers. Another way, or
in conjunction w/RS, is to find low-volatility situations using
Historical Volatility, Bollinger Bands, or Narrow-Range Bars, ect.
Explosive moves often follow low-volatility. Others use MACD
crossovers, RSI, blah blah blah. It goes on forever...
I'm currently experimenting w/one of Martin Pring's scans that may be
promising. First, I copied all of the TC2K groups into MS, then
filtered out all stocks under 100K and $3. I then made composites of
the groups, of which there are about 240 in about 40 sectors. I run a
momentum scan on all the groups to find those that are just starting
to gather steam (where the indicator has crossed up over its 10d ma
w/both lines trending up but still under 0.). Then I scan those
groups for ones in which the momentum of the RS is just starting to
gather steam (same criteria). The theory here is that, unlike RS
scans where the group/stock may have already shot its wad, this scan
will find bottom candidates w/good solid upside potential.
I ran the scan the first time this weekend. These are the most
interesting of the results. Charts are linked.
Auto - Major Manufacturers
Auto - Auto Parts
Chemicals - Specialty
Diverse Services - Rental & Leasing Services
Health Services - Long-Term Care Facilities
Leisure - Resorts & Casinos
Manufacturing - Metal Fabrication
Retail - Dept. Stores
Wholesale - Auto Parts
http://photos.yahoo.com/bc/hcour/vwp?.dir=/&.dnm=1MoMo+Groups+11-15-
02.GIF&.src=ph&.view=t&.hires=t
http://photos.yahoo.com/bc/hcour/vwp?.dir=/&.dnm=2MoMo+Groups+11-15-
02.GIF&.src=ph&.view=t&.hires=t
http://photos.yahoo.com/bc/hcour/vwp?.dir=/&.dnm=ManMetFab+MoMo+11-
15-02.GIF&.src=ph&.view=t&.hires=t
Thses are short-term charts and show the groups in relation to their
July lows. The first 2 charts show all the groups except Metal Fab.
The 3rd chart shows the Metal Fab group and the 5 stocks that make up
the group.
Of course, these composites are specific to my filtering criteria. So
someone else's Metal Fab group may not be in sync w/mine. This is
just an example of the method.
Harold
--- In Metastockusers@xxxx, "Steve" <steveftw@xxxx> wrote:
> Would anyone have any recommendations for specific indicators or
> studies for the potential of a stock? I've found the hard way that
> picking the right entry point is one thing - but finding the stocks
> with the potential for substantial gains is quite another (I
> know-stating the obvious).
>
> Thanks
>
> Steve in Ft. Worth
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