Every week I run technical stock screens covering all NYSE and NASD stocks trading above $6 and averaging more than 1 million shares a day. This typically results in between 15 and 50 charts to review visually. I’m looking for low risk, high reward price structures, which I’m not smart enough to program into the screening process. But it’s ok. I like to look at charts.
Existing picks, all longs, held up pretty well in last week’s selling. 3 of them dipped below their stops, with gains in two of the three. The newest pick, XXXX (subscribers), added last Monday, did surprisingly well.
As a result, list performance rose to an average of +4.2%, up from +0.2% the week before, on an average holding period of 16 days. The percentage change assumes cash trades, no margin, no options.
It feels good to come out unscathed in a week like that, although it would have been better to have had a few shorts. As you know, despite a preponderance of sell signals the week before, I didn’t like the setups. I thought that they lacked the potential for downside follow through.
I may have misjudged.
The current screen from charts as of the close on June 18, had 13 buys and 42 sells. The bears won every day last week. For the past 5 trading days, there were 65 buys versus 143 sells, a spread of -78. That compares with last Friday’s -21. The week before was -37. So it’s not like they didn’t try to warn us. I just didn’t want to believe it. I felt that the numbers were too small to matter, given the 1300 or so stocks that meet the volume and price minimums. Mea culpa.
This negativity is after a gradual slide from a peak of +218 on May 20. Compared to that, this still does not look like a momentum breadth thrust to the downside.
For that we would need a sell side margin of more than 100 in a single day. That would suggest a conflagration. This looks like just a little wildfire for now. Maybe it will explode, or maybe the bulls will show up with the cash hoses to douse the flames. We’ll see.
I liked 3 short setups from Friday’s screen, and one long, XXXX (subscribers) . Why one long? Because the book said I had to have at least one. Nah, I just liked the chart. It has breakout potential and a good place to put a stop loss if I’m wrong.
Here’s the raw data from Friday’s market, showing the one long pick I liked in bold green, and the 3 shorts in red (subscribers).
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