Stock likely to outperform over next 30 days

Going by the philosophy of vehicle selection is critical to swing trading success, we have introduced a new "Emerging Opportunity" list of 50 stocks likely to outperform in next 10 to 30 days. The algorithm scans around 7000 stocks every 20 minutes and selects 50 stocks. 

New Watch List: Emerging Opportunities

After reviewing the current watch lists, we designed a new model to pick stocks most likely to outperform the market over the next 30 days. This scan runs every 20 minutes and assigns an buy opportunity ranking to every stock. The top 50 opportunities are listed.

Swing Trading Bootcamp

August 3rd to August 6th 2010

Learn swing trading strategies for lifetime and become an independent trader. Learn how to find hot stocks on your own using Telechart. Learn to fish for swing trades on your own without waiting for alerts or hot tips.

This will be a comprehensive bootcamp on swing trading exploring all options of swing trading in detail.

During the course of bootcamp the emphasis will be on building hands on swing trading skills.

Participants will develop at least 25 different swing trading strategies during the bootcamp.

Telechart Gold or comparable software skills essential.

The Bootcamp will be conducted on the Members site and in a format similar to original and very popular  Episodic Pivots bootcamp.

What are your choices in your 401K

401K investors have choice of  possible strategies when deciding which funds to invest in their 401K. Each of the choice has certain advantages and certain risks. Understanding the available choice and then selecting a approach which best suits your objective is the key. 

The strategic choices available can be broadly listed as follow:

1. Target Date funds
2. Lazy Portfolios
3. Index funds based portfolio
4. Popular mutual fund newsletter approach.
5. William O'Neil mutual fund approach
6. Your own custom developed approach.

Each of these approach is workable. But to make them work you need to understand the workings of each of the approaches. Each of these approach is based on certain key assumptions. The returns you will get is a function of how those assumptions work for a particular market situation or for your personal situation. Besides the key assumptions the actual execution of those key assumptions also matters.

In order to understand these strategic choices and to develop your own plan, you need to open the hood of each of these approach and look at their inner working. If you do that you will become a knowledgeable investor. 

Information to do this kind of analysis is freely available on the net. Lot of this information is available within your own plan document in many cases. But most people are searching for simple solutions without going through the learning process. So even if someone gives them simple solution they do not understand it or can make it work for them. Average investor has very little understanding of this. Ignorance leads to them being influenced by others or making wrong choices. 

How to find rally leaders

The market has had a approximately 8% move from its bottom in last 16 trading days. In the last 16 days some stocks have made big moves.

The following 100 stocks are top ranked stock by % gains in last 16 days. Stock priced below 4 are eliminated and stocks with less than 100000 average volume in last 4 days are excluded to calculate top 100 list.


ACAP
ACF
ADCT
AEIS
AIXG
AKS
APC
APL
ARGN
ARMH
ARNA
ATAC
AWI
AXL
BP
BUCY
CAGC
CCO
CEDC
CGA
CHUX
CKEC
CNH
CPX
CRUS
CSIQ
CYT
DCTH
DGIT
DIN
DRYS
ENER
ENTG
FFIV
FOE
FUQI
GBX
GENZ
GET
HEAT
HEW
HOG
IGTE
INFA
INFN
IRE
ISLN
IVN
JASO
JKS
JRN
LAD
LDK
LDSH
LF
LLEN
LNCE
LSCC
MBI
MNTA
MON
MSB
MTG
MTL
NM
NR
NTGR
NTY
PCLN
PLA
POL
PWER
RDN
RES
RRGB
RRR
RVBD
RVI
SCHN
SFN
SGMO
SMP
SMRT
SOLF
SPN
SYNT
TIE
TKS
TSL
TSTC
TXT
TYH
UIS
URI
WLK
WPRT
WY
X
XXIA
YONG

Some leading stocks by price % change in last 16 days are:

ARNA up 66%

MBI up 54%

JKS up 43%

Some of these 100 stocks will form pullbacks in next couple of weeks and if market continues to go up they will offer a buy opportunities. Stocks that breakout in first few weeks of a market up move tend to lead the market move for many months.

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 and July23rd. 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.

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>4
• 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: 07/23/10

Select % change

and then run the sort.

This will sort your newly created Easyscan by the % change between those two dates. Select top 100 stocks from that and create a new watchlist "Rally Leaders".

Keep an eye on these leaders for buy opportunities once they have a pullback or sideways move.

 

Why your 401k investment returns suck

Corporate welfare days are over. Earlier companies would not only promise you lifetime job , but also a defined pension for rest of your retirement life. 
Most companies today have shifted from defined benefit plans or pension plans to defined contribution plans like 401k. With 401k plans you are incharge of your own pension plan.Your retirement income will depend on how much you have in your 401k and how well you invested it. 
The implications of this is clear, you need to develop skills to do this. If your skills in investing suck, your returns in 401k suck and as a consequence your retirement will suck. 
If you contribute the maximum allowed at present ($16500) for say 40 years of your working life you will have $660000 as contribution in your lifetime. (this does not take in to consideration the catch up provision which allows you to add 5500 more per year after certain age and assumes you have enough income to contribute full amount). It also assumes the contribution limit remaining same. In reality it is indexed to inflation. If you have both husband wife working these figures will be much bigger. If you do not do a good job of investing it you may not even have 660000 at the end of retirement.If you can compound that money at rate of 5% over 40 years you would have 2.2 million. If you can just jack up that rate by 1% you will have 2.8 millions.If you can compound at 8% then you will have 4.9 millions. 
Most people are not compounding at that rate. In fact many have lost money and lost years in the process. The reason for that is clear, average investor has extremely low skill levels when it comes to understanding how to invest. Most have no understanding of how their own plan works. People are looking for simple solution without willing to go through a learning process or putting in efforts. 
Average investor spends more per month on his Cable service than he is willing to spend in a year on educating himself or enhancing his own skills. 
If you spend time and effort in educating yourself about commonly used approach for retirement investment like: target date funds, index funds, lazy portfolios, William O'Neil mutual fund investment approach, fund timing based approach and understand the nuances and intricacies involved in each of those approaches, then you will make more informed and confident decisions. 
The question is how much time and effort you are willing to put for that. 

401K investing focus

On the members site this week we are focusing on the 401K investment approaches...

• To understand various options available for investing in 401K
• To understand the choices of:
• Lifestyle funds
• Index funds
• Lazy Portfolio
• CANSLIM mutual fund investing approach
• Mutual fund newsletters aaproach
• Momentum based approach
• To determine your own personal objectives:
• What is your overall objective
• What stage in lifecycle are you
• What is your skills level
• What is your motivation to update your skills
• What returns are you looking for
• To develop a approach plan for investment
• Basic logic and soundness behind your plan
• Number of funds to own
• How to select funds 
• What is market timing
• How to marry market timing+mutual fund selection method
• How to monitor mutual fund portfolio on ongoing basis
• When to exit at profit
• Operational issues involved in making your plan work
• Minimum holding periods for funds
• Cost of switching
• New contributions v/s historical pool of money
• Tools for finding mutual fund data
• How to setup a spreadsheet to track your funds

CYT: Earnings Breakout

New logo and new design and lot more new content......

Over this weekend I will be updating the site design and logo and the Members site also will be moving to newly redesigned site.
Next week onward lot of new content will be added.

Thanks everyone for your continued support , word of mouth, and recommendation to others.....

How to use the Price and Sector Momentum 50 list to find short term trades

Watchlist: Top 50 Stocks with Price and Sector Momentum

This is published daily. It uses a composite of sector+price+nearness to recent high +liquidity  to rank 7000 stocks and selects 50 stocks. This list offers you high probability swing trading stocks.

Here is a recent trade example of RES. RES was in this list 4 days ago and had 30 day price growth below 10% on that day. So it was selected for watchlist. It was also in Top 25 stocks with high short interest and momentum list.

RES:RPC Inc

Another trade which triggered yesterday from this list was MBLX. MBLX had less than 10% price growth in last 30 days, so it was on watchlist. It triggered a breakout yesterday.

MBLX: Metabolix Inc.

If you want to find trades like this on regular basis you should look at the stock highlighted in green in 30D Grwth column.

As I have said earlier there are two pieces to the short term trading puzzle: one is equity selection and second is timing that equity. The lists give you selected stocks with high probability of going up. But you need a timing strategy to enter and exit those.

If you spend time and effort understanding both part of this puzzle, you can find short term trading opportunities on regular basis. On the Members Site we have spent considerable time exploring various ways to select equities and time entries and exits. Such narrowly focused trading element by element analysis can help you deconstruct a trading method and master individual part of the puzzle. Many members have developed their own trading style using these building blocks.

Members Only

Be a part of the 1000 member strong traders community.....

The members only site crossed 1000 members in June 2010. All have come through word of mouth and recommendations from existing members.

• Stockbee Members Site
• Stockbee Training Guide
• Stockbee Market Monitor
• Position Size Calculator
• Open and closed positions
• How I invest in 401k

Waiting for Moses to give you trading commandments

What makes trading difficult and learning to trade even more difficult is that you have to figure out everything for yourself, design your own method, devise your own rules and have enough confidence to trust your own method. Unless you start your career in a big bracket investment bank or in a hedge fund, this is the reality. Moses is not going to give you 10 commandments on how to trade.

The ability to learn trading on your own is going to determine your success. So much of trading is about individualization of methods to your own unique way of thinking and style. There are no standard methods. There are approaches. If you are smart, you would be able to build a method after studying some of the well known public domain approaches.

One of the big problem for many people is that they are waiting for Moses to give them detailed rules, guidelines and every single details. I have bad news for them. It is unlikely to happen. God is too busy handling other things.

From a concept like breadth , you have to develop your own timing model. At best you can learn from others who have done it before. Will the method and model be perfect ? No. Will it be written in stone? No. Will it evolve over a period of time? Yes. But unless you make an effort you will not even reach anywhere.

Due to great dissatisfaction with 401k returns , I set out a way to develop a method to trade mutual funds. After hundreds of failed approaches and thousands of hours of efforts, finally I married two concepts breadth and momentum to create my method for trading mutual funds in 401k. 

Over several years I perfected it and fine tuned it. Is it perfect? No. Does it work? Yes. For me it works very well. I have avoided all bearish periods using it and have had great success beating the averages using it. It is a approach which I have detailed in many posts. Does it have every rule spelled out? No. Does it have flexibility, yes. The challenge for anyone trying to make it work is to make it work for themselves.

That is the critical challenge . Inability to do that is source of frustration for most people. It is true of any method. Does Top 25 method work, yes. For me it works very well. I was up 90% last year using it and is up 39% this year using it. So it works for me.  Does buying breakout works. Yes for me it works. While there are people who claim buying breakout does not work.

The most important question is can it work for you?

The answer depends on your own self efficacy beliefs. The most important element in your success is self efficacy beliefs. Self efficacy belief is your judgement about your own capacity to organize and execute a course of action required to attain a designated performance.

In the past I have written extensively on self efficacy beliefs and how you can enhance them. If you run a search on this site for "self efficacy" you will find many posts explaining self efficacy in detail and how self efficacy beliefs are acquired.

How does this concept of self efficacy becomes important to trading? If you understand it you will focus your energy on making following concepts work for you:

• Swing trading. For hundreds of years traders have been trading some form of swing trading method. All of them arrived at that decision after several trials and errors. Different people use different terminology to describe swing trading. But whether it was Livermore, Darvas, Baruch, O'Neil, Zweig, Wyckoff, or most traders profiled in Market Wizard, one thing is common, they are basically swing traders. Swing traders primarily focus on capturing a part of the move or a swing in stock moves. No one book or web site or article or training course will explain to you swing trading. But if you make effort and spend 1000 hours finding out and thinking about everything related to swing trading you will understand the basic elements of swing trading methods. If you do that you will be able to design your own swing method, you will be able to dissect any method and have enormous confidence in your own ability to swing trade. Moses is not going to give you ready made 10 commandments of swing trading.
• Entry methods. If you understand swing trading you will understand that basic elements of any swing trading method are entry techniques, exit techniques, stop techniques, risk management techniques. Various traders use various entry techniques. But if you spend 1000 hours studying entry techniques and thinking about it you will find great commonalities. And if you do that you will be able to design your own entry methods for your swing trading. Moses is not going to give you ready made 10 commandments for entry methods.
• Exit Methods. Various traders use various exit techniques. But if you spend 1000 hours studying exit techniques and thinking about it you will find great commonalities. And if you do that you will be able to design your own exit methods for your swing trading. Charles LeBeau has in fact spent years studying exit strategies and if you spend 1000 hours on exit or entry strategies, you would anyway come across his excellent work on entries and exits. Moses is not going to give you ready made 10 commandments for exit methods.
• Risk management. Like you thousands of traders have grappled with the issue of how to manage risk and at the same time maximise profits. Again a few basic approaches to risk management has evolved and are widely used. If you spend 1000 hours studying risk management , you would be expert in risk management. You would also understand the need for market timing. Market timing methods evolved as a result of peoples desire to manage risk and maximise returns. And once you start devoting time to market timing, you will invariably stumble upon market breadth. Thousands have attempted market timing before and based on their studies, few approached have become corner stone of timing models. Breadth is one of them. Moses is not going to give you ten commandments of risk management.
• Vehicle Selection. Once you understand swing trading and the nuances of it , you will also discover that selecting the right stock or instrument to swing trading can greatly enhance or magnify your returns. If you spend 1000 hours researching and thinking about vehicle selection then sooner or later you will stumble upon basic ways to select vehicles using momentum, mean reversion, growth, or value. And then if you spend 1000 hours on each of them, you might conclude momentum and mean reversion might be best ways to select stock for short term swing trading. Growth and value might be good ways to select stocks for longer duration swing trading methods. Moses is not going to give you ten commandments of vehicle selection.

The primary challenge in trading is about expertise development. All studies about the process involved in building expertise show that expertise is built through immersion and thousands of hours of practice. Trading edge is a procedural memory edge. Procedural memory can only be developed by practice and thousands of hours of deliberate practice.

Your self efficacy beliefs will determine if you would even attempt building your own trading expertise. Those who are serious about their trading will find many ways to make methods work for them. They will find many resources to learn trading.

How to use the tools from The Patient Fisherman blog

Tools From The Patient Fisherman

Risk Calculator
Fund Ranking Tool
Watchlist: Today's Earnings
Watchlist: Top 50 Stocks with Price and Sector Momentum
Export: Telechart | CSV | HTML
Watchlist: Top 50 stocks with Price Momentum and Value
Export: Telechart | CSV | HTML
Watchlist: Top 25 stocks with Price Momentum and Short Interest
Export: Telechart | CSV | HTML

The core skill in trading or the edge is in both selecting stocks and timing them. There are two basic ways to gain edge. One is stock or vehicle selection and the other is timing entry or exit on those vehicles. 

The Patient Fisherman lists are primarily vehicle selection list. They rank stocks as attractive for trading. Unlike scanners which use fix cut offs, ranking method that we use has more information. What ranking does is it gives you relative importance of the stock. For example if you look at the Top Stock Ranked by Momentum and Value then the number one ranked stock is better than number two and number two is better than number three and so on. The ranking prioritizes the ideas. So if you have a choice you would select higher ranked opportunity first. 

What these lists do is reduce the 7000 stock universe to 50 opportunities ranked in terms of attractiveness. At some stage we will further refine the lists to give you only 25 or less than 25 opportunities in terms of priority. 

These lists  do not offer you timing advise. A best of the stock if you enter or exit at wrong time is not going to make you money. For that timing becomes critical. Every stock has up trends and down trends. Timing techniques  allows you to identify  such periods and determine when to enter or exit. Your timing skills and strategies will determine the amount of returns which you can get from these 50 stock list. 

When it comes to timing strategies the 4% breakout along with associated conditions are timing signal for these stocks that can be used currently. We are working on the timing part of these lists. The timing part for this will be based on Stockbee buy and sell zone ratings. The buy and sell rating zones will tell you when it is time to enter and exit on these stocks. The work on that is going on currently and at some stage those rating will be introduced.

Some of you have asked how are these lists derived and can they be replicated in Telechart or Stockfinder. The answer is no. These lists are derived using a composite factors for which all information may not be available in Telechart. If you want to do something like this for yourself you need to develop it yourself. 

These lists and method is being developed by dcummiskey for his own personal trading because he has busy life and career and wants to have a way to trade in his 401k and other accounts along with his ongoing job and career. I just offered him hints and pointers, he developed it on his own.

If you are serious about your own trading and want to develop your own method either for 401k or for stock trading then you have to work out your own method. That is when you will have significant confidence in your methods and in trading. That will also improve your self efficacy beliefs. 

BIDU: Stock to watch

How to learn to trade profitably

If you are new to trading there is no defined path to learn trading. All traders  in the beginning  feel lost. There are hundreds of choices you need to make and hundreds of things you need to learn before you can expect to make consistent money.  You will have to jump couple of orbits to start understanding every thing and put a proper trading approach together. Which often  takes time, patience and persistence. Most traders who attempt to trade will not survive the learning curve. In the last 5 years or so many traders started blogs and attempted to trade and you will see most have quickly folded.   

We were all beginners ...............

One of the big problem for many traders is that they underestimate the amount of effort and time required to understand market and from there to move on to building profitable method. There is a constant allure of simplistic and tactical systems promising big returns and simple ways to make money. 

On the members site , one of the first things we constantly emphasize is that it will take you time to learn to trade. I always tell people to set aside minimum 2 years or so to learn trading if they are serious about trading. As a result most of the  1000 or so members have been around for 2 or more years. 95% of the members renew their subscription because of the ongoing learning emphasis and new material being added to the site every month.. Any member who has put in effort and struggled through initial few weeks and months and once got it right has found success on their own. You can ask around and they will tell you that. Every one of the 1000 members have come through word of mouth and reference of current member. 

How a 1000 member strong community can help you....

All of us were beginner at some stage and had exactly same problems like you are facing currently.   

When you are a beginner in any field or to a new setup or new method in the beginning there is big cognitive load. Whenever we try or attempt doing something new where we do not have sufficient expertise , our short term memory gets loaded and we are unable to do the job fluently and efficiently. Short term memory can only handle less than 7 pieces of information at a time. Excessive information creates cognitive load. Repeated practice reduces such cognitive task. To master a setup you need to organize around it and practice it then the cognitive load decreases. You need strategies to reduce cognitive load during learning phase.  

One of the benefit of group learning project like the members site is social conditioning and social modelling. Seeing people similar to yourself trading in real time and sharing their success and methods can enhance your own self efficacy beliefs. Seeing 1000 other beginners similar to yourself succeed by sustained effort raises your own beliefs that you too can possess the capabilities to master comparable activities required to succeed. In the beginning you will have many questions and if  you frame your question properly several members will answer it. They also had encountered same issues when they started out. Such interaction provides you a quick learning pathway.

You can not trade if you do not have software......

One of the first thing you need to have if you want to succeed in trading is right software and right broker. I would say first get the right software in place. You cannot learn trading unless you have a scanning software and also historical data. In learning stage you need to go through history and unless you have easy access to historical data you will not be able to learn much.

Your learning's will be very fast once you get a software, you will learn more in a month than you learned in a year once you get software and set it up properly. Because the discussion here or ideas here you will be able to see for yourself, they will not be some abstract discussion.

Telechart Gold is the software I use for my style of swing trading.........

When selecting a trading software look for something which is widely used by most traders. Often I come across new traders using some exotic software not routinely used by traders. You are just complicating your learning phase by doing this. For a widely used software there are ton of resources to help you learn trading quickly. If you select some exotic niche software , good luck, you are on your own.

The most commonly used software amongst active traders are:
Telechart
Amibroker
esignal
Stockcharts
Trade Ideas
Trade Station
Bloomberg

Telechart is the most commonly used software by most traders. And it is the best starting point for most new traders. Once you outgrow Telechart then you can think of other things. Amibroker is second best choice. You need a bit of programming knowledge to use Amibroker.

It will take you few weeks to months to become very good at using any software. That is typical learning curve. You can pray for miracles, but unfortunately that is the reality. So set your expectations accordingly. 

First learn how to use software and broker........


Once you get Telechart go to Worden site and in the forums there are many videos explaining how to use the software. If you spend a week going through all the video on Worden site you will get very good grasp on how to use the software. Scans for every method I use have been discussed multiple time and every week I make a post with all the past posts related to the method. I will also be putting up videos of how to setup scans from time to time.

Once you set up your software the next important thing to look at is which broker to use. If you are planning to be a swing trader or a trader that is going to do at least 20 to 25 trades in a year, look at your choice of broker. The number one broker used by most active traders in Interactive Brokers. 

Besides Interactive Brokers, there are many other good brokers around. I use Interactive Brokers, Fidelity, and TD Ameritrade.

Once you get broker take some time to learn how to place order, how to put a stop, how to close positions. How to access market data. How to use the brokers scanners. Most brokers have pretty good simulators which allow you to learn these things without risking actual dollars.

These two things, software and brokers are the first thing to get in place, if you want to trade profitably. 

It will take you 3 to 6 months or more to master simple swing trading methods......


Once you do that you will still have a learning curve of 3 to 6 month or more depending on amount of time at your disposal. Once you have the infrastructure in place, you need to understand how to use it properly. Most consistently profitable traders I know of had learning curve of 2-3 years before they became consistent. You will need lot of determination and hard work to make things work for you. If you are expecting miracles then get a prayer mat.

Once you have right infrastructure in place you need to learn the concept of swing trading. Most active traders use a variation of a basic swing trading method. The objective of swing trading is to capture meatier part of a short term trend or reversal. Swing trading methods are primarily based on momentum or mean reversion. 

I personally use a momentum based swing trading method. For each of the method traded here all the scans are done using Telechart. In some methods there are multiple steps. First a scan is done in Telechart then information is collected from other sites like Finviz, Moneycentral, IBD, or other sites.

Be aware of market situation......

You must also be aware of the market conditions when you decide to learn to trade. If you just decided to trade , your first to hundred objective should be to protect your capital. For active traders there are always opportunities in the market. Market is not going to run away from you. So if you are beginner you should first concentrate on setting things up. You can do lot of damage to your account if you start trading without ironing out all issues.

Focus on few methods......

I personally trade only  only 3-4 methods on daily basis:
Episodic Pivots
Top 25 breakouts
IPO

Swing Breakdowns (short)

If you read last few years post you will see these methods have been discussed again and again.  To me trading success is about mastering a setup. The more you trade and think about a specific setup like say the Top 25 breakouts, the more fluent you will become in trading them, you will start to understand the nuances of them. At some stage the setups would become part of you. If you master one setup you will find it easier to master other setups. 

Members Only

Be a part of the 1000 member strong traders community.....

• Stockbee Members Site
• Stockbee Training Guide
• Stockbee Market Monitor
• Position Size Calculator
• Open and closed positions
• How I invest in 401k

A short term bounce is logical....

• This is a holiday shortened week. Expect very light volume.
• We have seen selling for last 9 out of 10 days. As a result market is oversold and a bounce here is logical next move.
• The selling has resulted in the MM primary indicator reaching extreme zones.
• Rallies which start after such extreme readings are reached tend to be explosive rallies. They tend to be multi month rallies.
• Such rallies offer opportunities for big gains if you are well set to exploit them.
• In next few weeks to few months such rally will likely develop and that will be very profitable rally.
• As of now unless I see a breadth thrust of 2 plus on cumulative breadth ratio and change in primary breadth ratio, I will not trust bounces.
• A weak bounce will set up many stocks for further short sell.
• In the short run to play the oversold bounce please see my RSI 2 scan post. 

Top ranked stocks by momentum, value, and short interest

Watchlist: Top 50 Stocks with Price and Sector Momentum
Export: Telechart | CSV | HTML

Watchlist: Top 50 stocks with Price Momentum and Value
Export: Telechart | CSV | HTML

Watchlist: Top 25 stocks with Price Momentum and Short Interest
Export: Telechart | CSV | HTML