What are the indicators you scan for in your stock screening process?
I get asked this question all the time. I do not use a computer program to find “hot stocks’, but rather do all my scanning manually. This is very time intensive, but the rewards are priceless. There are a million indicators to use and I have tried them all over the last 20 years.
I will tell you a couple things NOT to use, which will shock you.
Every trader is brain washed into thinking every meaningful move in a stock has to have volume. I have watched great traders get run over by trains fading moves because there was "no volume" to support it. Volume does not have to come in the form of equity shares traded. Volume can be hidden in option contracts that institutions utilize to become leveraged. So, if you are looking for volume in a specific stock………you might be looking for the wrong thing. Option volume is much more important.
And NO, you do NOT need volume for a sustained move lower or higher. It is just another tool, and usually confuses most traders
#2- RSI/Stochastics/Bollinger Bands
These indicators measure how overbought/oversold a stock can be. However, they are also indicators that measure how solvent you are. Some traders fade big moves based on the reading on these trading tools. What they don’t know is how much "more overbought/oversold" the stock can become. Usually it becomes much more overbought/oversold than you can stay solvent fighting the price direction. Trade the TREND, don’t trade RSI, Stochastics and Bollinger Bands.
Fitzstock Charts uses Price, MACD, Key moving averages, and Trend with multiple time frames. Price structure is the pattern of price in relationship to the key moving averages. Ideally you would like price above 10, 50 and 200sma, with all key moving averages moving higher with price (for long setups). Things become much more tricky when price is trapped between key moving averages and then those key moving averages cross. A Golden Cross is the 50 simple moving average moving up through the 200sma, which is bullish. While the Death Cross is the opposite (50 through 200sma on the downside-bearish), which happened 12/6/18 on the S&P 500. We were able to capitalize on some huge downside moves after that Death cross, using Historical Chart Pattern Comparison (HCPC) and our Rules of Engagement (ROE).
Trades below from our Engagement Spreadsheet Focus List after the Death Cross
MACD is short for moving average convergence/divergence. It is an oscillator that we use to track price momentum. We also use this momentum indicator to see if price is confirmed on breakouts/breakdowns. If a breakout higher is not confirmed with MACD at highs, you have bearish divergence. If you then break an uptrend after bearish divergence in MACD, you can get some violent moves lower.
In October 10th, 2018 we broke below the uptrend line after bearish divergence in MACD. I went ALL CASH, and we had over 10 different put options double from our Engagement Spreadsheet Focus List.
We use a specific trading methodology that identifies the market trend, calculates our entry, and defines our risk. I scan thousands of charts searching for Historical Chart Pattern Comparisons (HCPC) to give us a trading edge. We incorporate our ROE with HCPC, and scale profits with suggested stops. We keep things simple by trading price patterns that deliver us high probability trades. Using this proven methodology we have developed a track record with over 75% winning trades and over 900 stock options that have doubled. We stay away from emotions and opinions and never trade event risk.
If you are tired of too many indicators to trade, and not capitalizing on market trend then consider a change. The definition of insanity is repeating your trading and investing mistakes over and over again and NOT doing anything about it.
Fitzstock Charts, LLC
You want 2019 stock market predictions?
Everyone lines up their forecasts every year, trying to make bold predictions. There are many analysts, institutions, money managers, and traders who want to make a name for themselves with crystal ball predictions.
After 20+ years trading the market, I have learned many things. One of them is that "market predictions" make you look stupid. You have the same odds in Vegas, with trying to predict the stock market. Why would you trade those odds? Well, we don’t. Instead we search thousands of chart patterns looking for price pattern repetition. We call this Historical Chart Pattern Comparison (HCPC). https://fitzstock.com/hcpc
The stock market repeats itself with psychology and emotion over time. This trading behavior is incorporated into specific price patterns (some listed below).
-MA top (double top, with lower high)
- Head and shoulders (topping pattern)
-Break below the uptrend line (which we saw in October 2018, when the S&P 500 broke below 2900, giving a strong sell signal, where I went all cash)
-WV bottom (double bottom, higher low)- we saw this pattern with Apple in 2013 at $60/share, then the stock went up 300%
-Bull flag above the downtrend line- we saw this pattern develop 11/2016 where I went “ALL IN” long with leverage ETFs (SPXL & TQQQ)
So, getting back to your "market predictions".
Fitzstock Charts nailed the charts in early 2019 with the 2008 historical chart pattern comparison, which called for a huge rally to test the 50 day simple moving average. Using this historical chart pattern comparison analog we were able to capitalize on the +10% move off the lows in the stock market, and had 20 different stock option DOUBLE (up over 100%).
You do not need to predict the stock market, but rather trade the TREND, with historical price pattern comparisons. We incorporate our Rules of Engagement (ROE) with these pattern repetitions and capitalize on huge moves in the stock market. All of our entries are listed on our daily engagement spreadsheet focus list, with calculated entries and defined risk. With this structured methodology we have developed a +90% club with over 900 different stock options that have doubled, while keeping our winning percentage >75%.
If you are under performing the stock market, or just want to learn how to trade with a structured, disciplined and proven methodology then consider upgrading to Fitzstock Charts.