Monday, October 13, 2008

Some Interesting Numbers From My Scans

Short post tonight. Just wanted to point out some interesting numbers I saw in my scans and ratios tonight that really surprised me, considering how much we were up today.

#1) There were only 547 breakouts of 4% or higher today on heavier volume. This is a good number, but nowhere near the numbers of I have gotten in the past on heavy up days. On September 30, we had 603 breakouts. On September 18 and 19, we had 1852 and 1248 breakouts respectively. I expected a huge number today (over 1500 is the number I had in mind) and was surprised when we didn't see that, at least for a record-setting day.

#2) My price/volume scan (the main one I use to find IBD-type long candidates) had only 28 stocks show up today. This scan looks for stocks above their 50 and 200 day moving averages and were up on the day with higher volume, and under normal conditions, even in a bear market, I can find at least between 40-50 in this scan. This highlights the problem I am having in terms of finding charts that are worth playing for my style of trading.

3) My oversold reading has quickly gone back to completely neutral in one day. If you saw the chart from this weekend, you can see how extremely oversold we were, but at least on this one Telechart measurement I use(it is based more on individual charts rather than the indices), that has been taken care of and we are back to being flat. The momentum indicator is still oversold however so these may cancel each other out.

GXDX, AVAV, and SVR are three IBD-quality stocks that I am adding to my watchlist tonight. I really don't see any others. And the above info pulled from my scans takes a little bit of the shine off the action today for me. Not all of it - it was certainly impressive and I do think we could be seeing a bottom here. I just think it will be a process with some pullbacks mixed in, perhaps sharp ones, and I think for the near-term, things will continue to be volatile. In terms of swing-trading, I think it is too late to buy and I think the possibility of a pullback soon is strong with as many crosscurrents still facing this market.

Because of this, I am leaning to possibly adding some inverse ETF's with tight stops at some point tomorrow if we rally a little further, or if we gap up again. If you look at the charts below, you can see why I am thinking this and where I may take a shot at entering a few of these. The lower volume really bothered me today. Perhaps I am overreacting because it was a holiday and such but I just expected more on such a big percentage move. Bottom line is that I won't be chasing longs here, and although in all likelihood I won't do anything at all, I may try a few of these inverse ETF's near resistance to see what happens. I would keep the stops very tight however because I do realize that I could be completely wrong and this is not the time to be stubborn and locked into any outlook, at least in my opinion. Just like stocks moved much faster to the downside than people expected, the possibility does exist of a few more days of very powerful moves to the upside.

S&P 500, Nasdaq
DDM, SSO, UYG, URE

As I write this, the futures are up big once again. If this holds tomorrow, I may indeed try to fade it. Perhaps that is stupid, but we shall see what happens. If we do pullback, that's when i would be looking to get in - not here. Good luck Tuesday.

1 comment:

Alen said...

i'm trying a new system to catch stocks at bear market bottoms. instead of looking for breakouts i run a scan for IBD quality stocks and dump them into one or more yahoo finance portfolios.

second i go through every stock and look at the chart. anything that is trending up with trending up technicals i leave alone. anything trending down but with the possibility of a bullish divergence on the macd or rsi i add to a watch list and double check the financials just in case.

then i keep an eye on the watch list every few days to see how things are going.

unlike bill o'neill i also like other technical indicators and i've been reading about elliott wave lately. according to EW we still have a leg down than a nice rally and the final downtrend sometime next year.