The First Hour
Stockscores.com Perspectives for the week ending October 27, 2014
In this week's issue:
In This Week's Issue:
- Stockscores Canadian Tour
- Stockscores' Market Minutes Video - Online Trader Training
- MoneyShow eShow
- Stockscores Trader Training -
- Stock Features of the Week - Broken Charts
Stockscores Canadian Tour
Stockscores will be in
Toronto - Nov 8 and 10
Ottawa - Nov 11
Montreal - Nov 12
Edmonton - Nov 15
Calgary - Nov 17 and 18
Vancouver - Nov 19
Surrey - Nov 20
Webinar - Nov 25
I will show the process for finding and managing trades for three types of traders:
The weekly trader - person who is managing their retirement, wants to do the process once a week.
The daily trader - person who can check the market during the week but does not want to follow too closely while they make shorter term trades
The day trader - person who want to be in and out of positions within a day
For details and to register for one of these free events, click here.
Stockscores Market Minutes Video - The Stockscores Education Center
This week, I give a quick overview of the new Stockscores Education Center and then go in to my regular weekly market analysis. Is the correction over? The Market Minutes answers that question.
Click here to watch
MoneyShow eShow
I will be doing a webinar for the MoneyShow's eShow on Tuesday Nov 4 at 11 am ET. Click here to register
Trader Training - The First Hour of the Trading Day
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.
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Long Term Breakouts
This week, I scanned the three year weekly charts using the Stockscores Market Scan tool in search of stock making long term breakouts from predictive chart patterns. The Canadian market did not reveal anything that I liked but there are a couple US listed stocks that look good as longer term trades.Back To Top
1. HSNI
HSNI has been trending sideways under $64 resistance for nearly two years. This week, it broke through that level. The stock held up very well while the market was pulling back over the past 6 weeks. Support at $59.50.
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2. NXTM
NXTM is showing a decent turnaround chart, breaking to the upside from a rising bottom after breaking its long term downward trendline earlier this year. Support at $12.75.
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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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