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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (47478)	2/8/2012 9:53:06 AM
From: Johnny Canuck	Respond to of 70350

Keep in mind it is the absolute number that I am more interested in. This scan is trying to identify stocks with a low debt to equity ratio, high return on capital, sales growth q-q of greater than 5 percent, income growth of greater than 5 percent and in a positive up trend as indicated by the price relative to the moving averages. The number bottomed at around 24 stocks when the market sold off last year. It has recently hit a new high of 134 now, These are essentially the stocks with the best fundamentals and in strong uptrends. The return on captial requirement of greater than 20 percent alone reduces the market universe from 7000 stocks down to 400 stocks as there are not that many companies with the kind of return. I am trying to develop a new oversold/overbought indicator. I saw an article about the concern that the DOW transports have not hit a new high even though the DOW had. In DOW theory the DOW and the DOW transports have to both hit new highs to confirm a new trading range. As the DOW represent old economy stocks and you have to ship the products of those old economy stocks the theory goes that transportation demand should be at new high levels also. I agree with the observation but the transports can either lead or lag the actual DOW though. A slight lag is not a concern. The DOW continuing to make new highs for an extended period of time without the transports hitting new high is a concern. I am not sure I am worried yet. I still only expect a mild pullback on the first try. A lot of people are expecting the pullback and fund managers that missed the move in January are going to want to show the name of winners in their portfolio for the end of quarter reports at the end of March quarter.