Sunday, July 22, 2007

Filter details, and explanations

Many of the filters / scans listed and described below are taken from authors of other blogs, in the public domain. These blogs typically apply the strategies to the US markets. The results of the ‘TSX Trends’ filters are for stocks listed on the Toronto Stock Exchange (TSE). Care should be taken when trading these stocks as some can have very choppy volume, although I do use a volume filter to some degree. It should be noted that inter listed stocks exist and have higher volume that is spread out over many markets, due to higher participation that includes US markets. These stocks are not great in number though.

The spreadsheet has many columns. Each column has a ‘1’ or ‘0’. A ‘1’ indicates that the stock meets the scans criteria for the day. Here is a brief explanation of what the scans are looking for.

Up Trend – This is not actually a scan but an indication of trend. It uses the 10, 20, and 50 day MA’s. On a weekly time frame, the 10 must be above the 20, the 20 must be above the 50, and the close must be above all MA’s. On a daily time frame, the close, 10, and 20 must all be above the 50 in any order, and the 50 must be rising. The purpose of this is to indicate that the stock is in a clear trend, this may or may not be relevant to the type of trade you are looking for. Using just the price squeeze, for example, looking for a quick price move, the direction of the move would most likely be in the direction of the main trend. I also use this to identify stocks to trade similar to the way AlphaTrends trades.

Down Trend - This is not actually a scan but an indication of trend. It is the opposite of the Up Trend description above.

Price Squeeze – This is a comparison between Bollinger Bands and Keltner Bands, as a ratio. The ratio has to be greater than 2 to trigger this. Price usually moves strong, short term, once the range is broken.

The Rocket – This is a bounce off the bottom filter. Looks to buy stocks that have come down hard finding buyers to quickly take it for a ride up. This scan is from Stockmonster.
Basically it looks for a low rsi(2) after an 8% decline over 2 days. The blog has descriptions and results of trading with the results of this scan.

The Crash – This is the opposite of the Rocket, you could say this is a bounce off the top filter. From Stockmonster.


BOBv32x – This filter finds pullbacks, go long. BOB = Blow-off-bottom. There is a good post at Woodshedder’s blog on this filter.

3C – This uses a custom cumulative TSV indicator thought up by Bull Trader of Trade Guild. I only use it as a confirmation of money flow into a stock. TradeGuild uses his 3C indicator in other ways. I have attempted to copy the indy since he will not give out the formula, it is close but not quite there yet. Don’t bother asking me for my version, until Bull Trader releases his.

MA Crossover – This uses a 4, 8 and 21 day EMA. The filter looks for stocks that hove crossed all three in one day with the close above all 3 EMA’s. The MA cross was posted on
FilteringWallStreet. The link above gets you to a post where he explains how the cross over works.

Filter 1 – Read about it here.
A high Average Day Range 30 (ADR30) and a low rsi(2) works best. Muddy also tells me that a very high rsi(2) also works well. He buys as soon as the price “goes green” which means above the close of the prior day.

Filter 4 – Read about it here.
This looks for an 8% rise in price, then waits for the price to pull back into the “Muddy Zone” which is the area between the SMA10 and EMA30
Wait for green and put in a 3% stop, you don’t get taken out too often, according to Muddy.

Rise – This one looks for a 25% increase in price in the last month. These stocks can be held for the longer term. When used in conjunction with another filter, it gives a good entry for a long term hold for your portfolio. Muddy, Green on the Screen, used this and I understand he originally got the idea from Stockbee.

Total – A tally of all the other filters.

Disclaimer

The information presented on this site is for educational and entertainment purposes only. This site contains no suggestions or instructions that you must follow, do your own research and due diligence before committing your cash to the markets. Your on your own.