8/12/2010

How to find shorts opportunities:Part1



The market has had a approximately 10% move from its bottom in last 30 trading days before reversing hard. In the last 30 days some stocks have made big moves and some stocks lagged the market. Both of these kind of stocks offer opportunities for short sell. During market corrections or bearish phase stocks which have ran up a lot correct 20 to 25% and laggards start going down. You have short opportunities at both end of the market. You can look for buyer exhaustion setups in stocks that ran up a lot and you can look at breakdowns move in stocks which were under performing during the rally.

The following 100 stocks are top ranked stock by % gains in last 30 days. Stock priced below 5 are eliminated and stocks with less than 100000 average volume in last 4 days are excluded to calculate top 100 list.

ABG
ADCT
AEIS
AFFY
AGCO
AGO
AGU
APC
APL
ARGN
ARNA
ASYS
ATAC
AXL
AXTI
BC
BCS
BID
BP
BUCY
CAGC
CCO
CGA
CLF
CNH
CRUS
CTXS
DCTH
FDML
FOE
FSYS
FUQI
GENZ
GRA
HEAT
HEW
HGRD
HTHT
IDSA
IGTE
INCY
INFN
ING
IOC
IPG
IPGP
ISLN
IVN
JASO
JKS
KRA
LAD
LDK
LFL
LIZ
LLEN
LNCE
MBI
MDCO
MNTA
MOD
MTL
NEWP
NR
NTGR
NTY
NVMI
OEH
ONXX
OPLK
OWW
PCLN
POL
POT
PPCO
PTRY
PWER
RES
ROC
SCMR
SDRL
SFN
SMP
SOLF
SOLR
TEN
THRX
TKR
TKS
TRS
TRW
TSTC
UCTT
UIS
URI
WHX
WLK
XJT
XTXI
YONG




Some leading stocks by price % change in last 30 days are:


ARNA up 109%






JKS up 102%



And you can see more stocks ranked by % change like this...


If you see the above stock IDSA, it has corrected 19% in last 6 days from high. Like this many of the strong stocks will have sharp pullbacks if the market continues its down move. A stock like JKS is vulnerable to 10 to 20% correction (JKS has earnings due on16th so be careful).
Some of these 100 stocks will  pullbacks 15 to 255 in next couple of weeks  if market continues to go down. They  offer   opportunities on short side. In a broad based correction all strong stocks are vulnerable to such correction. And in this market we have seen that when things go up everything goes up and when things go down everything goes down. So if you are looking for quick profit short opportunities the 100 stocks above offer you those opportunities. On a list like this you can either run a breakdown scan or a swing exhaustion scan. That way you will get only 5-6 opportunities to work with instead of 100.


To find  these 100 stocks using Telechart, you need to be familiar with the "Custom Date Sort" function. Using the "Custom Date Sort" you can sort the "Common Stocks" for the period between July 1st  (the lowest point in the rally) and August 9th (the highest point in the rally). July 1st was the bottom of this uptrend. Once you get the sort you need to select Top 100 stocks by % change between those 2 dates. You can also look at Top 200 stocks instead of 100 if you are looking for more opportunities


If you want to use the filters I used to eliminate low priced and low liquidity stocks then you need to first apply the filter and create a Easyscan and then sort the Easyscan list by the Date sort.


Here is a step by step way to do this:
  1. Create a liquidity PCF: MINV3.1 >= 1000 This gives you stocks which had minimum 100k volume in each of the last 3  trading days excluding todays trading day.
  2. Create a Easyscan with following conditions:
  • Common Stocks
  • Price per share>5
  • Liquidity PCF =true

Once you have this list setup go to Custom Date Sort and set sort date as:


Start Date: 07/01/10
End Date: 08/09/10
Select % change
and then run the sort.


This will sort your newly created Easyscan by the % change between those two dates. Select top 100 or 200  stocks from that and create a new watchlist "Rally Leaders". On this list you can use two kinds of scans to further reduce number of opportunities:


Stockbee Breakdown Scan

C <= .96 * C1 AND V >= 1000 AND V > V1

Or

Stockbee Swing Exhaustion Scan

C < C1 AND C1 > C2 AND C2 > C3 AND C1 > O1 AND C2 > O2 AND C3 > O3


Keep an eye on these leaders for breakdown opportunities. If market continues its correction many of them will offer 10 to 25% opportunities.


In second part I will talk about how to find laggard 100 to 200 stocks during this 10% rally and look for short opportunities in them.  In Part 3 I will have a video to show you how to do this.












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