gemini -
You won't believe if I tell you - those picks are based almost completely on fundamentals or better said : fundamentals transferred into ratios and using these ratios as measurement for the stocks / industrygroups longterm trend ( or non-trend ).
There's no secret in it , because the QP 2 Warehouse tool does almost all the ranking work for you.
www.qp2.com
Once you get used to this approach, you'll be surprised, how easy one can predict how the chart of a stock will look like, once he has compared the various fundamental ratios.
It also helps to detect either inefficiencies in the market ( not all 10.000 or so stocks are covered completely and every day by Analysts or the media ).
It's a fairly simple approach to create watchlists, which may include stocks not everyone trades or hears about every day.
I.e. for the "buy the dips " strategy, I scan my data base for stocks with high EPS strength, high group strength , high relative strength ( this is not the popular RSI indicator, though ). + some parameters like price + volume - don't want to trade stocks trading less than 100K shares a day on average, and the price should be between X and XXX $/share.
Have a look at the charts of the symbols I posted above and you see what I mean. There are some stocks in this list, which barely reacted even on the sept.11th attack - at least not to the extend the broader market did. Investors have quite a lot of confidence in these companies - therefore the high strength and therefore, one can be lucky to get the chance to buy a dip in some of those stocks.
For the " multiday to multiweek swings " I simply use a list of stocks with high EPS strength, but medium relative strength, placed in medium to high strength industry groups. I usually end up with a list of stocks which are swinging up and down in 10% - 30% moves over the course of several / days weeks, but are within a trading range.
The group strength makes sure, to a certain extend, that the stocks industry is at least in favour to some above average degree. High earnings-strength makes sure, that there is some institutional interest in the stock.
But the medium relative strength of the stock itself indicates, that investors are not yet fully or not anymore really convinced about the outlook of the for the company or the market in general -
This stock may belong to category : interesting investment on the long run, but maybe not now. This mood or perception changes from time to time, so swings the stock's price.
For the daytrading low- risk category:
I' like to see EPS above average, groupstrength, relative strength in the upper 3rd of all stocks in my database, but not explicitely in the highest, momentum driven ranks either. I further look for sufficient liquidity, because a low risk approach includes, that you can get in or out of a market at any time you whish - if you have to wait for buyers or sellers , risk increases substantiallly.
I consider high liquidity in a market as the most important aspect for the risk averse trader.
Furthermore, you'll need at least a certain daily trading range, enabling you to make some profits from priceswings - but , in order to stay with a low risk approach, this daily range , or better ATR, shouldn't be too large either.
So if a stock trades within a daily trading range of 3% - 5% of its shareprice, this would be fine for me. More important for me is, that the daily chart doesn't look to erratic in it's daily swings.
Common criteria for most of my scans are, that a stock has to be at least in the upper 3rd. of all rankings - Earnings, groupstrength, relative strength ( again - not the RSI meant here ).
These criteria narrow my complete stock-list down to maybe 300 - 400 stocks, out of total of 9.700 in my database.
The scans mentioned above are only applied on these 300 - 400 stocks, so the final watchlist for each "strategy" will contain usually not more than 40 - 60 stocks, most of the times much less.
These 40 - 60 stocks make up the permanent daily watchlist, witch is scanned for technical trading signals on a daily or weekly base.
The daily scans can include simple signal alerts like MACD crossovers, MA crossovers, or pullbacks to support etc. .
not too much different signal types.
For further "finetuning", once a candidate has been selected for a trade, I do check the weekly charts and also the 30 and 60 minute intraday- charts for periods of up to 20 - 60 days
( I use QuickenQuotes live where you can pull up i.e. a 60 minute chart for the last 60 days and a 30 minute chart for the last 20 days )
I do not use Level 2 data ( for Nasdaq ), because I don't do much, if any intradaytrading.
Hope this helped a bit.
