Sunday, April 20, 2008

How to Find Stocks Using Telechart

I've been wanting to write a post about how I use Telechart to find possible longs and the scans I have in Telechart that help me do this. Well, here goes.

I basically use three main scans to search for longs each day after the market closes. I keep any stocks I find interesting on two main watchlists: Long Buy List, which holds the stocks I would consider buying the next day, and Long Watchlist, which holds stocks that are either setting up but not ready to buy yet or stocks that are currently overextended but would be buyable on pullbacks. At any one time(depending on the overall market), I usually have 10 to 20 stocks in the first watchlist, and 100-200 on the second watchlist. I have matching watchlist for short candidates if the market conditions are weak, a watchlist for the general indexes and some Telechart indicators I use, and an IBD Stocks watchlist that contains the IBD 100 and Top 200 Composite stocks from the past week.

My first scan is the most basic - it is called Price/Volume and is looking for stocks above their 50 and 200 day moving averages that are up for the day on volume that is at least 50% higher than the normal average daily volume. The basic PCF for this scan is as follows:

(C > C1) AND (C > AVGC50) AND (AVGC50 > AVGC200) AND (V > 1.5 * AVGV50) AND (AVGV50 >= 200) AND (C > 4)

I put this PCF in an easy scan and scan all stocks in the system. There is a minimum price and minimum volume component already in this scan. This scan typically presents 20-60 stocks per day in good market conditions, and I can often find stocks forming possible bases using this scan that I then put in my Long Watchlist. I believe I got this scan from the Mauitrader blog of Joshua Hayes.

My second scan is simply a breakout scan that screens for stocks up 4% or more on higher volume. This scan comes from Pradeep Bonde from Stockbee and is part of his Market Monitor. The PCF is as follows:

( 100 * (C - C1) / C1) >= 4 AND V >= 1000 AND V > V1

I also put this in an easy scan and scan for all stocks. There is also a price/volume minimum in this scan. I sometimes find different stocks in this scan than the price/volume scan above due to the requirements for increases in volume. The reason this scan works well is that it helps show which stocks are moving higher in a powerful fashion and prevents me from missing one of those stocks on their journey higher.

My final scan is one I developed based on the Balance of Power indicator (BOP) I like to use when viewing charts in Telechart. I call it Max BOP, and it basically looks for stocks that above its 50 day moving average and has BOP levels of at least 70. This scan will show me which stocks have the most accumulation in their charts, and although often I see the same stocks in all of these scans, this helps point me to the ones with the most momentum behind them. The main PCF is below:

BOP1 >= 70 AND (C > AVGC50) AND (C > 4)

I put that PCF in an easy scan and then scan all stocks and put a volume requirement in with the easy scan. I will get a lot of charts in this scan and I manually scan them to see if there are any attractive candidates I missed on the first two scans.

After going through these three scans and flagging any watchlist candidates, I like to go to my IBD Stocks watchlist and go through those to see if any are worth adding to the watchlist as well. To wrap up, I manually go through the Long Watchlist first, flagging any that I would be interested in buying. I move these to the Long Buy List, remove any that are no longer buyable, and I am done scanning for long candidates for the night.

By using these three main scans, I am able to catch most of the stocks that are either starting to make a big move upward or in the process of making that big move. Getting them in the watchlist helps me keep track of charts showing good characteristics and allows me to view them each night in a quick manner to see which ones are presenting buy points. I hope this helps explain how I use Telechart.

If you are interested, here are a few other posts I have written about using Telechart to find stocks, in this case possible short candidates:

Updated Short Scan for Telechart

How I Find Shorts

Feel free to ask questions and I will try to help out if I can. Good luck this week.

1 comment:

Anonymous said...

Hello,

is this your actual strategy or do you have change your strategy to find possible stocks (this post is about 2 years old :-) )

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