Swing Trade Screens – Yes, More Shorts But There Are Limits, You Know

The final list of double screened output for last week resulted in 5 charts with multiple buy signals, and 118 with more than one sell signal. Of the 5 buys, 4 were inverse funds. Therefore the signals were actually bearish. And the final one was a precious metals ETF. Now, there’s a ringing endorsement for this market!

Meanwhile, on Friday alone there were just 5 buy signals, which, likewise, were all inverse ETFs and a gold ETF. There were 85 sell signals on Friday.

This is like the previous Friday, which also had an overwhelming preponderance of sell signals.

With 118 sells to choose from today, I found plenty of short sale candidates. The problem is that the market got way ahead of us this morning. So I whittled the list down from more than a dozen to just 5, and I will only start those if they hit a limit price equivalent their low price on Friday. Technical Trader subscribers click here to download the complete report.

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I would not want to follow the usual procedure of just adding them as of Monday’s opening price. Even though they would be likely to work out well over a few weeks, there’s a good chance that Monday’s open will be near the low of the day. An ensuing face ripping dead cat bounce would put these deep in the hole to start if entered on the open. So the entries will be conditioned on trading at those limit prices at some point during the week. Then I’ll adjust on the fly next Monday.

The screen results come from a universe of approximately1200-1500 stocks daily that meet the criteria of trading above $6.00, and with average volume greater than a million shares per day. I start the weekly process by screening for daily buys and sells from the previous Friday through Thursday. I then rescreen that output, for additional signals in the progression on Thursday and Friday.

Last week, the list had an average gain of 8.4% with an average holding period of 18 calendar days, including picks closed during the week, and those still open on Friday. That worked out to an average gain of 3.2% per week.

The percentage gain is based on 100% cash positions, with no margin and no use of leverage or options.

Five picks hit their stops last week. All were longs. The average gain on the picks that hit stops was 9.3%. Three picks remained open. All were shorts. I have adjusted stops on the open picks.

Picks closed out so far in June have averaged a gain of 7.1% on an average holding period of 22 calendar days. That works out to an average of 2.2% per week. Picks closed out in May averaged a gain of 3% on an average holding period of 2 weeks. That worked out to an average of 1.5% per week. There were 28 closed picks. 25 were shorts.

April was a challenging month. The final tally of closed picks in April had an average loss of 0.4% with an average holding period of 11 calendar days. My system does not do well when the average low to low cycle duration drops below 4 weeks.

March was better. Picks closed in March had an average gain of 4% with an average holding period of 23 calendar days.

This week we start with 3 picks plus the 5 conditional picks. The 3 existing picks are all short (tank-gawd). The 5 new picks are also shorts, of course.

I’ve added stop levels to existing picks, to protect profits and close out picks as they age. While the new picks have limit entry prices, they don’t have stops. I’ll add them next week to any that are opened based on hitting their limit prices.

All active picks and those closed last week are shown on the table below. Charts of new and open picks are below that.