The Good Morning Trade Routine
Stockscores.com Perspectives for the week ending October 26, 2013
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Free Workshops
How to Find and Profit from Hot Stocks
Calgary-Vancouver-Surrey
November 12 - 16
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In this week's issue:
Stockscores Market Minutes Video
A one hour morning routine can elevate your trading success! This week's Market Minutes video shows you how to find the stocks that are in play for the day. Watch the video by clicking here.
How to Find and Profit from Hot Stocks
Learn how to find the market leading stocks of the future while managing your risk so you can sleep well with the stocks you own. Attend one of the free Stockscores events in Calgary, Vancouver or Surrey and get Tyler's latest insight on how to beat the stock market and trade well. Whether you want to improve the performance of your retirement portfolio or make stock trading your career, this presentation should not be missed.
November 12th - 16th
Click here for details
The First Hour of the Trading Day - What to Do
Stocks that are in play, those that have the story to capture buyer interest and enjoy market beating trends, leave clues. The outperformance of these stocks are driven by new information that gets the buyers excited and willing to pay higher prices, pushing these stocks in to market beating upward trends. Whether you like to trade large cap, well established companies or penny stocks, the signals from the market are the same.
The process to find them is very simple if you have the right tools. The Stockscores Market scan and an hour of your time at the start of the trading day will allow you to search all North American markets for the markers that telegraph a stock's future out performance. Before I explain what to look for, let me provide some insight in to the theory behind the trading concept.
Stocks that go on the steep upward trends that we all love to own do so because there is significant fundamental change in the company. Actually, to be more accurate, I should say that there is a perception of significant fundamental change. What is actually happening is not as important as what investors perceive to be happening. Sometimes stocks move simply because investors renew their interest in a good company.
These stocks move because of new information. A pharmaceutical company may have a new drug that is showing positive effects in testing. A mining company may be on the verge of a major discovery or a retailer may be enjoying great earnings because consumers love their products. Ultimately, it is about an improved potential to make money in the future.
The question you have to ask is, "Do all investors get the new information at the same time?"
The answer, of course, is no. Every stock has investors who follow the company very closely and know more about what the company is doing than anyone else. These investors have an advantage over other investors because they can uncover new information earlier.
When they do find out something significant, they act. If the new information is positive, they buy the stock aggressively, causing the stock to move up in price and trade more volume than normal. Those are the signs that we want to look for.
Most of this abnormal market activity starts during the first hour of the trading so the trader who can dedicate that time to trading can uncover around 80% of the good entry signals that come through the trading day. If you have all day then you can find the other 20% of the opportunities as well.
The Stockscores Market Scan tool allows you to scan all of the North American markets for stocks that meet a variety of criteria. There are many ways to set up the tool to look for stocks that are "in play" but here are some simple settings to apply in the first hour:
Exchange - I like to scan the Canadian exchanges separately from the US exchanges because the Canadian market is less liquid, requiring a lower liquidity threshold which I will explain in a moment. So, set this filter to either All Canadian or All American.
Gain/Loss - set this to > 3% over the past 1 days. This will find the stocks that are moving up.
15 day Resistance - set this to breakout, doing this will help you avoid the stocks that are stuck in trading ranges and unlikely to make a lasting upward trend.
Volume Relative to 20 Day Average - set this to Above.
Number of Trades - this is the liquidity requirement, to trade we need stocks that are active enough to get in and out easily. Set this to > 200 for the Canadian exchange or > 1000 for the US.
You can start to run this scan about half an hour after the market opens. When inspecting the charts, look at both the daily and the intraday 15 minute chart. You want to focus on stocks that are starting moves out of low price volatility and with market activity that really stands out relative to how the stock normally trades.
There are other factors to look for that can improve your performance, consider the Stockscores Active Trader Course to take your trading of this strategy to a higher level of profitability. To learn more, attend one of the upcoming Stockscores events in BC and Alberta this November, we will also likely offer a webinar version of the presentation for those outside of that region.
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Last week I featured three stocks for more conservative investors looking for yield and the potential for capital appreciation. My inspiration came from the breakout for the TSX 60 index, a signal that the Canadian market was finally going to try and catch up to the US exchanges. While these picks were pretty conservative, their performance this week was excellent. T.MTL, which has an historical yield of just under 5%, gained 9% this week. T.SGY picked up a 5.5% gain while boasting of an historical yield of over 6%. Finally, T.ECI has been paying a 7.2% yield and added 2% for the week.
This week, I ran the Stockscores Simple Market Scan in search of charts breaking from predictive chart patterns. I focused on stocks that traded at least 250 times on the Canadian markets or 1000 trades on the US market. Here are three stocks that stand out:
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1. T.TRI
T.TRI has been building an ascending triangle for the past six months and is breaking out of that pattern this week. The stock will find some resistance at $40 but with support at $36 and currently trading at $37, the reward for risk is good for the conservative investor.
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2. TILE
TILE has held under $20 resistance since 2011 but last week broke through that ceiling out of a cup and handle pattern. Support at $19.
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3. SSD
SSD had a strong week which took it to new highs and setting up for the start of a long term upward trend. Support at $31.
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References
Get the Stockscore on any of over 20,000 North American stocks.
Background on the theories used by Stockscores.
Strategies that can help you find new opportunities.
Scan the market using extensive filter criteria.
Build a portfolio of stocks and view a slide show of their charts.
See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make
investment decisions. Information in Stockscores Perspectives is often
opinionated and should be considered for information purposes only. No
stock exchange anywhere has approved or disapproved of the information
contained herein. There is no express or implied solicitation to buy or
sell securities. The writers and editors of Perspectives may have positions
in the stocks discussed above and may trade in the stocks mentioned. Don't
consider buying or selling any stock without conducting your own due diligence.
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