Finding the strongest and weakest stocks | stockbee


Finding the strongest and weakest stocks

Strength in a stock is timeframe defined. A strong stock for a given time frame shows momentum. Swing traders focus on stocks with momentum or stocks likely to soon have momentum.

For a day trader a stock that is up or down  for the day and continues to go up or down is a strong stock. A stock which starts its move at one end and end near high for the day is strong stock. Within that move if it makes big % gain of say 10 to 20% for the day it is good strong candidate for day traders.

For swing traders a stock that shows 3 to 10 days strength is good candidate as it allows them to capture part of the move. A stock that goes up 25% in a month is good swing candidate provided one can identify such stock say in first one third of the move or in other word if we can figure out a stock up 8% in a week is likely to go up 25% in next 3 weeks.

For longer term trading involving hold periods of months to years strength might be defined differently. A strong stock on that timeframe is one that continues to go up without much retracement . Strength on longer term moves has two components one part has to do with momentum or rate of change. While another part of good longer term move is resiliency. Resilient stock sustain there move for extended period of time.

SWKS is an example of one such strong and resilient stock.

It is one of the handful of stocks that has been going up for over 2 years with very little retracement. Stocks like these are good candidates for longer term trading . Identifying such stocks can help you pyramid in to them. They exhibit certain characteristics during their up move and if you know what those are you can try and identify and scan for such stocks. 

WLT is an example of very weak stock. It has been in downtrend for 4 years. From a high above 100 it has been cut down to few cents now. And during this move it has had sustained downtrend .

If you want to find stocks for position trading look for stocks like SWKS or WLT. If you can regularly find stocks like this or scan for them you will have an edge on longer time frame.

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