To: jaytee who wrote (12044 ) 12/10/1999 12:11:00 PM From: David Lind Read Replies (1) | Respond to
Jaytee, I will typically start by running a scan through IQ Charts. I have a subscription to their service, but they also permit a few custom scans on their web site, which I understand was just purchased by SI. (http://38.186.148.51/chart/notice.htm). My scans on the subscription site are fairly complicated, but the basic idea can be replicated on the web site. Basically, I scan for high cap stocks above a stock price of 30, which have a 50 day moviing average below the 200 day moving average, and an RSI below 20. I will also select a sector based on what sector I am looking into at the moment. By spending some time developing the right scans, then moving to the charts of those stocks that fit your profile, you find that an image begins to develop of what you are looking for. In my case that is a solidly uptrending stock that has been temporarily trashed. When I see the right chart, I will then move to Briefing.com and run a search of all information available. That will typically tell me exactly what has happened in the recent and past history. From that, I can make a pretty good estimate as to why the stock is in a pullback, and if I can expect a comeback or further weakness. Was there a bad earnings surprise? Did an analyst come out with a downgrade? Is there truly a problem with the company that would keep me away? If you can use the scans to identify a stock that fits the profile, and if you then determine that it is a temporary situation, then IMO, you are looking at a very good candidate for a long position to buy, CC against, or sell a put. So once that canditate is on your watch list, check daily to be sure that it is not going to continue falling. If it levels out, and begins a turn back, that is the time to strike, providing no new bad news is coming out. Not a good idea being the first one in, because you may be wrong. But generally, a good stock that has been momentarily hit because of sudden news, one bad quarter, or a downgrade from a major analyst, is a very good buy at the right time. There are a few of these golden opportunities every week, and an IQ scan will help you keep an eye out for them. If you are serious about this, I would recommend their subscription service. It is $24.95/month for delayed quotes, and their scans, which you can customize, are well worth the price. (Unless SI raises the price. Let's hope not.) If you want to build your own confidence in this approach, it is easy enough to print out charts that you think fit the profile, then watch them over a few weeks. It is good trainiing. If you would like to send me stock ideas after you have done your research, I will be happy to give you my two cents on how the chart compares to what I use. I am not into giving advice on trades, but maybe I can share some experience.
