Stockscores.com Perspectives
For the week ending January 19, 2001
In this week's issue:
- Special Announcement: "Make Money Trading Stocks" Course Coming Soon
- Commentary: How to Use the Stockscores.com Scoring System
- Feature Strategy: A Stockscores.com Market Scan
- Tip of the Week: Canadian Symbols
- How to subscribe to the Stockscores.com Perspectives Daily Edition
***Special Announcement***
Stockscores.com founder, Tyler Bollhorn, will be presenting three informative
and free seminars on how to Make Money Trading Stocks in the Calgary area.
Whether you aspire to be a short-term day trader or want to learn how to
improve the performance of your investments, we encourage you to join us for
one of these free one hour seminars in the Calgary area.
Wednesday, February 7th - 5:30 pm
Bankers Hall Auditorium
315 8th Ave SW
Thursday, February 8th 7:00 pm
Carriage House Inn Ballroom
9030 MacLeod Trail SE
Saturday, February 10th 10:00 am
Olympic Volunteer Center
North End of McMahon Stadium
(Below Red and White Club)
Space at each of these events is limited, so please RSVP by email to
perspectives@stockscores.com and let us know which day you will be attending.
***Stockscores.com Commentary***
The namesake of the Stockscores.com web site is the scoring system that the
site uses to rate stocks. Stockscores.com covers over 21,000 North American
stocks and updates the Stockscores on a daily basis. This week, I thought I
would describe the scoring system and how to best use it to help you find good
investment opportunities.
To begin, we need to understand what technical analysis is. Technical analysis
utilizes stock market activity to identify stocks that are trading on private
information or situations where the psychology of investors is changing.
Technical analysts have developed a wide array of price, volume and momentum
indicators to help predict the future direction of stocks. One of the
indicators that is exclusive to Stockscores.com is the Stockscore itself. This
indicator is really a combination of a number of other technical indicators.
Some of the indicator components are very common; others are unique to
Stockscores.com. Some are as simple as a moving average; others are as complex
as a measure of the statistical significance of abnormal price activity.
The combination of the technical indicators that form the Stockscores.com
scoring system creates a much more powerful indicator that is a useful measure
of the technical state of a particular stock or market index. What is also
important is that the indicator is easier to understand than the many
components that make it up. For the neophyte, it may be difficult to understand
the signals created by a MACD or Stochastic indicator, but simple to recognize
the significance of a numerical scale. In this way, Stockscores.com
accomplishes its goal to interpret technical analysis for its users.
What is important to understand is the Stockscores.com scoring system is an
indicator, and not a black box that will bring each of its users their
fortunes. Its power cannot replace the ability of the user to further conduct
their analysis and due diligence on a company, enabling them to find stocks
that are worthy of their investment.
As a successful trader, I utilize the Stockscores to identify stocks that have
good potential. I then apply other skills of technical analysis to further
filter through those stocks. Visual chart inspection is the most important of
these technical analysis skills, and it is the one that requires the power of
the human mind. The many essays found in the School and Strategy areas of
Stockscores.com should help new users get a base understanding of these
important concepts.
Assuming we are looking for stocks to buy, the primary things that we want to
look for when looking at charts are signs of optimism and abnormal behavior. We
also want to ensure that the opportunity has not already been priced in to the
stock, making entry too risky.
Optimism is the psychological condition we want to seek out. Stocks that are in
strong down trends or are not trading any significant volume are not showing
any optimism. Stocks that are trading sideways but are moving closer to a line
of resistance are showing optimism, as are stocks that are starting to trade
stronger volume than normal. We want to focus on stocks that are showing
optimism.
We also want to find stocks that are behaving abnormally. The reality of the
stock market is that there are people who anticipate positive new information,
either by knowing the information in advance or by conducting good analysis and
figuring it out. These people act in the market with strength, and leave a
trail of abnormal behavior.
For example, if a stock has been trading under $20 for some time, and then
breaks through $20 one day to close at $23, it has done something abnormal.
What would make market participants willing to pay more for the stock than they
had been willing to pay for some time? We can hypothesize that some people
acting in the market are anticipating new information, significant enough to
make them willing to pay more for the stock. These investors may be acting on
private information, or simply anticipating new information through good
analysis.
Finally, we want to make sure that the stock we are considering is not too
risky for us. A stock that has moved higher the last five days in a row has a
greater potential for a pullback than one that has been trading sideways for
five days in a row. While the up trend indicates the stock is strong, the stock
is also risky and may not be worth considering.
The Stockscores.com scoring model factors in optimism, abnormal behavior and
risk, providing an effective way to filter the wide world of stocks down to a
short list of candidates. As investors, we can then visually inspect the charts
of these stocks to ensure that they are appropriate for us. Combining the
powerful Stockscores indicator with the rationality of our own analysis can
yield some excellent opportunities.
Enough Said.
***Stockscores.com Feature Strategy ***
The Stockscores.com Market Scan tool allows users to scan the thousands of
North American stocks that the site covers to reveal those stocks that meet the
specific scan requirements that the user establishes. This week, we are going
to implement a scan that focuses on the Stockscore.com scoring model to find
some good candidates. Setting up the scan is relatively simple, while
inspecting the charts visually requires more experience. Conduct this scan
yourself and look at the charts that I have found to be the best candidates so
you can see what to look for when looking at stock charts.
To set up this Market Scan, go to the Market Scan area of Stockscores.com and
enter the following criteria:
Set "Score" to " >= 80"
I limit price to stocks under $100, set as "Price <= 100"
Select an Exchange that you want to focus on. Today, I have chosen TSE
Set "Today relative to 150 day volume average" to "Above"
Set "$ Value Volume" to some minimum requirement for liquidity. The higher you
set this filter, the fewer the candidates you will get. I have chosen $500,000,
which is entered as "500000"
Based on Friday's trading data, this scan revealed 11 stocks. I have commented
on each of them below, and why or why not they are good opportunities.
Astral Communications (T.ACM.A) a good-looking stock, but volatility recently
makes this one less predictable than I like. Pass.
Founders Energy (T.FDE) I alerted the readers of our daily newsletter to this
opportunity, and it turned out well as the stock has gained about 24% since.
Great if you own it, but too risky at the levels.
Intrawest (T.ITW) a good looking chart, but we want to focus on stocks that
are breaking from well defined trading ranges, and this stock does not pass
that test.
Liquidation World (T.LQW) great if you own it, but profit takers will come in
to this stock soon and I expect it will come down. If you own it, dance close
to the door.
NAL Oil and Gas Trust Units (T.NAE.UN) good, but the stock will likely
encounter resistance at $9.40 in the short term and limit upward mobility.
Pass.
Open Text (T.OTC) looks like it could be a nice comeback story, it is worth
considering but it will probably have volatility along the way.
Primewest Energy Trust Units (T.PWI.UN) looking very good, but wait for a
break to a new high. Keep it on the radar screen.
Royal Bank of Canada Preferreds Series N )T.RY.PR.K) if you are looking for a
preferred, this one looks very good.
SNC Lavalin (T.SNC) great looking chart, this stock is breaking from a
consolidation and recorded an opening gap on the breakout. Volume could be
better, but I expect this stock will do well in the weeks to come.
Teknion (T.TKN) looks good, but we will probably see the stock stall at $21.
Worth keeping an eye on.
Transalta Power Units (T.TPW.UN) conservative investors should give this a
look as it should do well in the weeks and months to come.
***Stockscores.com Site Tip of the Week***
We added a lot of new Canadian users to the site this week, so here is a review
of how to enter Canadian symbols in to the Stockscores.com system:
For companies trading on Canadian exchanges, use the following:
CDNX: V.xxx
TSE: T.xxx
CDN: O.xxx
ME: M.xxx
(xxx = symbol)
Canadian companies that trade in US$, or are followed by the suffix .u should
be entered as .us to return a valid symbol.
Separate multiple symbols with commas (eg. T.RY,T.NT)
***Stockscores.com Perspective Daily Edition***
Each day, we scan the market for opportunities and reveal only the best to our
Daily Edition subscribers by email. As we feature stocks, we add them to our
model portfolio and remove them when it is time. Our performance is measured
daily.
Gain/Loss since January 1, 2001 up 14%
Subscriptions entitle readers to see our regular stock picks and our daily
market commentaries where we show a historical line representing the
Stockscores. A valuable way to find stock opportunities, but to also learn
about picking and trading stocks.
For more information and a free trial, please contact Cindy Rowe, who is in
charge of subscription sales, at perspectives@stockscores.com.
***References***
To get the Stockscore on any of over 20,000 North American stocks:
stockscores.com
For a background on the theories used by Stockscores:
stockscores.com
For strategies that can help you find new opportunities:
stockscores.com
To scan the market using extensive filter criteria:
stockscores.com
To build a portfolio of stocks and view a slide show of their charts:
stockscores.com
To see which sectors are leading the market, and the stock components:
stockscores.com
***Change of Email Address or Removal from Email List
Please go to the Registration area of the site, and utilize the Edit tool.
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. |
