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Forum - Wall Street Pit    Stock Due Diligence for All

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From: rmlinden (Rep: 354) reply to bigjoeDate: 02/06/2011 04:46
Forum: Wall Street Pit - Msg #2080001Thread #673159554 (Rec: 0)
Re: When conducting a Stock Scan, how many results should you aim for on aver...

it depends on the scan

I strongly urge you to really learn the most fundamental technical indicators
This is no joke: get at least 15 to 20 different articles for ever technical indicator below:
ADX
RSI
MACD
Stochastics (fast or slow)

the reason for this is that most of the texts are just interpretations and opinions. By getting a shitload of differnt articles you will notice differences. Those differences are what are important.

there is alot of hidden information in technical indicators. Take for instance simple moving averages. It seems that they are related to price movement, they are not. Because they will generate signals even when the price remains absolutely the same over an extended period of time. You might think that when day after day the high low open and close are identical that the stock doesnt move. That is not true. The stock always moves.
To the right
This is time.

The RSI generates signals when the stock makes a higher high or lower low, but the RSI does not do the same. But how is it possible that the stock rises to a new high, but the rsi doesnt? Is it possible to predict that a divergence will happen in the near future? Yes it is possible. It is hidden in the formula of the RSI. You can accurately predict upcoming bullish and bearish divergences.

How comes that the MACD, RSI, ADX and moveing averages nearly always generate their signals around the same time? In my opinion most of these indicators are basically the same indicator. It is in the formulas.

All in all I, again, must urge you to really truely dig into the technical indicators. Know their formulas. Think long and hard. Why do they give signals, what are their flaws etc.

Then open an account at stockfetcher.com and start experimenting.

An example of indicator failure can be found in the stochastics. It is possible that the stock rises day after day after day (for eternity) and that the stochastics are still always at the exact same level. Its will be a flat horizontal line. No matter what value it has.

Do not be naive in thinking that you either need fundamental or technical analysis.
You need both.

my list of rules:
-avg volume over 200k per day
-stock must have positive equity
-stock must not have a small float (float are the number of shares that are tradeable - 100million shares with 90% insider ownership means a float of 10million)
-stock must next to no debt

then the technicals:
weekly stochastics oversold
daily adx must be red, over 35 and the -DI must be topping out (be horizontal)
RSI on the 5 day average must make a higher low
On Balance Volume must be bottoming out
The stock must have lost its volatility
Volume must have dropped down.
There should be a wedge pattern forming
hourly chart must be in a bullish setup
preffered: there should be accumulation patterns, iceberg orders. Wierd volume spikes that indicate front loading

and important: There should NOT be hype about it. If there is hype about it, it means the stock is out in the open.


The number of results will vary on a daily basis. It depends on what you are scanning for. If you get too many results then just keep adding criteria to reduce it to an amount you are confortable with to fundamentally DD.



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I screw up at a regular basis

"An investor is one who smokes a pipe, and strokes his chin wistfully while he watches his losses mount. A trader doesn't own a pipe." morequesnoans21

 

There is the moral of all human tales;
'Tis but the same rehearsal of the past.
First Freedom and then Glory—when that fails,
Wealth, vice, corruption—barbarism at last.
And History, with all her volumes vast,
Hath but one page

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Reply to bigjoe - Msg #2080000 - 02/06/2011 02:31

Re: When conducting a Stock Scan, how many results should you aim for on aver...

Cool, do you have a link?
What would you like to do? Message: Endorse | Bookmark | Report AbuseUser rmlinden: Reward | Watch | Ignore

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