I've been experimenting with this methodology:
Every weekend I use a screen to get stocks with certain fundamentals
(based on P/S, P/E, etc). Then I rank the list by 13 and 26 week
relative strength and discard any stocks that are not near the top on
both lists. This leaves me around 20 stocks per week.
Then, I look at the 20 charts to see which charts have nice, smooth,
up trends. I each chart is displayed:
-- ATR(10), this is used to calculate position size
-- ATR(10)/Close, this is used to get a sense of volatility
-- ATR(10)/ATR(50), this is used to get a sense of "is the stock more
volatile than usual"
The ATR(10)/Close usually works out to be around 3.5% to 5.5%. Here's
the part I'm still grappling with: I ignore any stocks above 4.5% so
that I end up with the smoother, tighter up trends. Please share any
thoughts on this.
PS. I owe much of this to Roy's newsletter and Super's posts over the
last few years.
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