4 stocks to watch from IBD 100

As a swing trader looking for small swings, your approach is slightly different from a investor looking at IBD 100. You time frames are much smaller and you are looking at string of 8-20% moves to capture in short time frame.

Lets look at the IBD 100 list today. I sorted it by one month weakness and looked at stocks with less than 10% growth in last one month.
100 * (C1 - C22) / C22

You get 12 stocks.

AFSI,AmTrust Financial Services Inc. (Google Yahoo Earnings Chart)
CEDC,Central European Dist (Google Yahoo Earnings Chart)
CRNT,Ceragon Networks Ltd (Google Yahoo Earnings Chart)
DRC,Dresser-Rand Group Inc (Google Yahoo Earnings Chart)
DWSN,Dawson Geophysical Co (Google Yahoo Earnings Chart)
GRMN,Garmin Ltd (Google Yahoo Earnings Chart)
HDNG,Hardinge Inc (Google Yahoo Earnings Chart)
NVDA,NVIDIA Corporation (Google Yahoo Earnings Chart)
OII,Oceaneering Internat (Google Yahoo Earnings Chart)
SII,Smith Internat Inc (Google Yahoo Earnings Chart)
SLB,Schlumberger Ltd (Google Yahoo Earnings Chart)
VSEA,Varian Semiconductor Equipment Associates Inc (Google Yahoo Earnings Chart)

Out of this eliminate stocks up more than 2% which gives us 6 stocks.

AFSI,AmTrust Financial Services Inc. (Google Yahoo Earnings Chart)
CEDC,Central European Dist (Google Yahoo Earnings Chart)
DRC,Dresser-Rand Group Inc (Google Yahoo Earnings Chart)
GRMN,Garmin Ltd (Google Yahoo Earnings Chart)
NVDA,NVIDIA Corporation (Google Yahoo Earnings Chart)
VSEA,Varian Semiconductor Equipment Associates Inc (Google Yahoo Earnings Chart)

Now out of these I eliminated GRMN and DRC because they had down gap recently. That gives you 4 stocks to anticipate breakouts on for today.

AFSI,AmTrust Financial Services Inc. (Google Yahoo Earnings Chart)
CEDC,Central European Dist (Google Yahoo Earnings Chart)
NVDA,NVIDIA Corporation (Google Yahoo Earnings Chart)
VSEA,Varian Semiconductor Equipment Associates Inc (Google Yahoo Earnings Chart)

So this is the list I will watch for high volume breakout of 2% plus. Any such breakout gives you a low risk entry in to a trending stock with good fundamental. The swing might give you anywhere from 5 to 20% . While the investors look for the perfect patterns and cup and handle or pullback to 10 week MA, for a swing, you are just looking for minor weakness.You can anticipate breakout. You are focusing on very small set of stocks. Any high volume breakout on these kind of stocks anyway gets the IBD crowd excited, leading often to follow through in next 5 to 10 days.

Now if you use same logic and take 10 day weakness instead of one month weakness , you will get lot more candidates to work with. In such cases your profit objectives may be much smaller of 5 to 10%.

Now this is what I call window washing strategy.

Later: Window Washing and Trading

Related Post: Using minor weakness to time IBD 100 entry

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7 comments:

dgd said...: Hi Pradeep--
2 quick questions:
What method do you use to determine if the volume is heavy enough to buy a 2% breakout that occurs early--before 1030 am for example.

How do you handle intraday reversals: for example CEDC was up over 2% until mid-day (on light vol), then declined with general market weakness.

Thanks for your willingness to share your experience and methods.; Oct 11, 2007, 2:52:00 PM
SANTOSH SHINDE said...: Pradeep,

What do you think of using the lowest price during the 22 day (11 day) period instead of close 22 days ago?
This "low in last 22 days" might have its drawback but your swing philosophy of limiting the 10% rise makes little more sense.; Oct 11, 2007, 3:21:00 PM
Pradeep Bonde said...: dgd
1 by calculating volume needed for breakout in advance. The volume has to be higher than last trading day. Most breakout will have around 60% of that volume in first hour itself.
2 You have to anticipate days like today. which is what Market Monitor methodology does.

Santosh
calculating from low will give you misleading figure.; Oct 11, 2007, 4:12:00 PM
Raghu said...: Hi Pradeep,

Can you release pcf formula for mimicing IBD 100 list ? Can we use the IBD 200 pcf in any way for arriving at IBD 100 like list ?

- Raghu; Oct 11, 2007, 8:45:00 PM
ThereIsNoSuchThingAsTrend said...: Pradeep,
On massive down days like today many of the IBD stocks are sitting on support.
Can we purchase indescriminately because of the nearness to support making for a safe trade (if support is broken we can get out with a small loss)OR should be wait to let things shake out a bit more.
I recall when we had the down day in august where everything reversed I was paralyzed wondering if i should just stay out for awhile. Then 2 days later everything moved so much that I thought we had moved too far from support. Just looking for your opinion and perspective on when to get back in and what should trigger it?; Oct 12, 2007, 12:31:00 AM
Mike said...: Pradeep,
I am worried about the market reversal of yesterday. Could this be a sign that the market will now sell off badly? Is this the climax of our bull market?

I am not a trader but must hold my stocks for 12 months for tax purposes. Should I be worried or is such rapid reversal in market healthy and normal in a bull market?

It looked to me that all stocks (oil service, etc) fell off a cliff at the same time yesterday using some stupid excuse of Baidu revenues only being in line. It looked like the big boys took this as a sign to start selling everything.

I would hate to be sitting losing all my profits when I could rather sell out now and take the tax hit for trading.Should one panic sell based on the sharp market reversal of yesterday (on no real news of substance) or would one be better to just keep holding thinking that the bull market is healthy and with some legs yet.

Thanks for your thoughts,
Mike; Oct 12, 2007, 6:24:00 AM
Pradeep Bonde said...: Raghu
A PCF cannot get you the 100 list as it contains earnings plus other fundamental data . You can try same thing on Modified IBD 200, you will get more stocks to work with. The reason to use the IBD 100 is because that is what the crowd actively follows. Hence breakouts have them piling on.

Tony
It depends on your holding period. The July August period was different from this one where after a vertical run we are correcting. The dip will lead to ssector rotation and old leaders may not be best buy, even if they pull back to support or 10 week MA. Look for new , emerging leadership.
Mike
I am a aggressive trader, not investor. As I understand it as a investor if you are investing for long term, you should never panic and just buy Index funds.Eventually the market always comes back.; Oct 12, 2007, 8:31:00 AM

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