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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Eric P who wrote (4903)	10/17/1999 7:52:00 PM
From: Dan Duchardt	Read Replies (2) \| Respond to of 18137

Eric, As you point out, it is very interesting to have immediate alerts the moment any stock breaks to a new 52 week high or low. I have configured additional screens to eliminate stocks if their previous 52 week high is within the last two weeks or if their average volume is less than 150k shares. As I'm sure you are aware with all the work you have done to implement your system, the permutations on all the variables one could look at are endless. There are a few general thoughts I have to offer. 1) The moment a stock breaks to a new 52week high may be well past the optimum time to open a long position. I have long wished for access to a list of stocks that rose (not fell) to a level within a few % of the 52week high to do the same calculations I can do for the ones that break it. I have no way of generating such a list. I can see near end of day all the ones that are above a certain level, and have achieved a certain gain, but no way to identify the ones that made that level and then retreated. I have a feeling though that rising stocks within a certain % of the 52week high represent a better opportunity than stocks that have broken through, especially as they rise above the high of a recent pull back. Some swingtraders look for exactly this kind of set-up. 2) I would not eliminate all stocks that achieved their prior 52 week high within the last two weeks. Many stocks run for several days after first breaking out, achieving new highs several days in a row. I would instead be inclined to discard only those that have exceeded the two week old high by a significant amount. 3) I've been paying a lot of attention to Bollinger Bands and Relative Strength Indicator as a predictor of turning points for swing trades. While nothing is foolproff, and I personally find myself too impatient many times, I have no doubt there is something of value here. 4) Lower volume stocks often break out with volume that exceeds historical averages, but a few block trades do not indicate trading interest. Scanning for total volume in excess of normal, with a higher than normal number of trades is, I think, better than scanning for block trades on these stocks. Take a look at REPT as an example of a nice breakout that could have been nailed with a good volume-trade# scan as a stock moved above recent highs before reaching a 52week high. I'm sad to say I sold this puppy at $5 on September 14 after giving up on it, and didn't have the courage to get back in the next day, or the next. Of course there are many more liquid stocks of more interest to the daytraders, and I'm sure you have many examples of those. Dan

To: Eric P who wrote (4903)	10/18/1999 1:12:00 AM
From: Dan Clark	Read Replies (1) \| Respond to of 18137

Eric, First, your comment, "...all of the alerts are 'scored' based on how well they meet certain criteria." was very intriguing! Most trading "systems" seem to deal with either boolean logic or a more organic approach. I.e., the boolean logic systems have rules like, "If the price is greater than X, and the Stochastic is lower than Y, and... then Buy!" Fuzzy logic systems refer to patterns like hammers and dojis, and MA crossovers and rainbows. Both are good but different. This is the first time I've read about a points-based system. I understand that you have a system that you've used for your own trading (you've mentioned it in several earlier posts). Also, from recent posts, you are creating a system for Pristine that sounds very nice. Do both of these systems use a points-based approach? Regarding trading strategies in general, several people have discussed issues around trade rate (number of trades per minute) or volume as indicators of trading activity. Also, support/resistance points have been discussed many times. I've noticed that that many times when a support/resistance line has been broken or result in a significant failure, it seems that trade rate starts jumping just prior to the movement and increases during the penetration or bounce. What are your thoughts about trade rate as a primary or supporting indicator? Anyone else?