What Keeps You From Trading Success
Stockscores.com Perspectives for the week ending October 17, 2016
In this week's issue:
In This Week's Issue:
- Upcoming Free Webinar
- Stockscores' Market Minutes Video - What Keeps You from Trading Success
- Stockscores Trader Training - How to Use the Stockscores Indicators
- Stock Features of the Week - Stockscores Simple Weekly Canada
Upcoming Free Webinar
How to Become a Stock Market Day Trader
Wednesday Oct 26 - 6:00 PM PT, 9:00 PM ET
Click here to register for this free webinar
Description
Stockscores founder Tyler Bollhorn will walk you through the steps to becoming a full or part time stock market day trader.
Videos of recent webinars (Click to watch)
How to Manage Your Portfolio in 10 Minutes a Day
How to Quickly Analyze Any Stock or Market
Stockscores Market Minutes Video - What Keeps You from Trading Success
This week's Market Minutes video looks at the possibility that the markets are starting a correction. Plus, I go through some of the common factors that stop traders from succeeding. Click Here to Watch
To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel
Trader Training - How to Use the Stockscores Indicators
I developed the Stockscores indicators as a way to take the six important elements of chart patterns and put them into a pair of indicators. These indicators are available at Stockscores.com for almost all North American stocks and are very helpful for doing an assessment of whether a stock is worth considering.
Here's how the Stockscores indicators are calculated. Every stock, index or ETF that Stockscores covers is given 50 points to start. Points are added for positive chart characteristics and deducted for negatives.
For example, a break through price resistance is an indication that buyers are stronger than sellers, so the algorithm awards points when this happens. A downward-sloping moving average is a sign that the sellers are in control, so points are deducted when this happens.
I created the algorithm with about 15 different metrics that can be measured from market activity, each awarding or deducting points based on whether that metric was a positive or negative signal of future price direction.
This algorithm defines the Signal Stockscore, which tends to bounce around quite a bit. To smooth out the line, the system then calculates a seven-day exponential moving average of the Signal Stockscore to produce the Sentiment Stockscore. This is the important number to watch.
A Sentiment Stockscore above 60 indicates that investors are generally optimistic about the stock, index or ETF. A score below 40 indicates the market is pessimistic. The sweet spot is to find Sentiment Stockscore lines, which can be seen on any Stockscores.com chart, sloping upward and crossing through 60. You should then look at the price chart to see a confirming price pattern where the stock price is moving up through resistance from low price volatility.
I don't recommend buying a stock just because its Sentiment Stockscore is 60 or higher, but I do find that strong, market-beating stocks tend to have good Sentiment Stockscores early in their trend. The Stockscores indicators are a great way to provide a quick reference for the strength or weakness of a stock.
You can check the Stockscore for most North American stocks, ETFs and indexes by entering the symbol in the upper right corner of the Stockscores.com website. The Stockscore algorithm requires 200 days of data to calculate the Stockscores indicators, so newly listed companies will only display a chart and not the indicators.
You can review the charts of any North American stock and see the Sentiment Stockscore for free. Just enter the symbol in the box at the upper right of the site. Canadian symbols require a prefix: "T." for the TSX and "V." for the Venture. Members can use the Sector Watch to see what areas of the market are strong and the Market Scan to screen the market for stocks with good Sentiment Stockscores or perhaps those that are just crossing above 60 today.
It's important to remember that the Stockscores indicators are applied to daily chart data and are not useful for a shorter time frame. A stock may give a good entry signal on the intraday chart suitable for day or swing trading despite having a weak Sentiment Stockscore.
What's powerful about the Stockscores is that they allow you to use a computer to filter the market, seeking out stocks with optimistic chart patterns. Stockscores.com has a Market Scan tool for filtering a large universe of stocks in search of stocks that meet the filter criteria you establish. It's hard for a computer to look for chart patterns the way a human can, but the Stockscore is helpful because it attaches points to the different elements of chart patterns.
Here is a link to a video in the Getting Started area of the Stockscores Education Center which explains the Stockscores Indicators as well.
Click Here to Watch
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Stock Features of the Week - Stockscores Simple Weekly Canada
The leading sector right now is Energy so this week I opted to run the Stockscores Simple Weekly strategy on the Canadian market because of the concentration of Oil and Gas companies listed in Canada. Found a couple of good long term reversal charts:
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1. T.CNE
T.CNE is moving to a new 2 year highs after trending sideways for the past four and a half months. This creates a break through resistance from a rising bottom on the weekly chart, a good sign for a further upward trend. Support at $4.15.
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2. T.ESI
T.ESI broke out from a bottom fishing pattern two weeks ago and is starting to inch higher after that important charting event. Good upside to $12 before it finds resistance. Support at $7.40.
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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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