What to screen for in stocks to swing trade

R

rgilbert93

I know this is a bit of broad question but what do you guys do to narrow down the thousands of stocks out there in the beginning? A few of the things I use ( so far unsuccessfully) are:

Beta
sharp volume increases
EMA crossovers (I guess that would be the correct term?)

Do you guys use these things too? If not, what do you use?

Do certain technical indicators work better for shorting a stock? For going long? Any details provided would be GREATLY appreciated. Thanks
 
I like to see consensus earning's estimates being revised up. Nothing better than an upgrade to give a boost to price. Usually analyst will steadily upgrade futures earnings estimates prior to giving an upgrade, so this way you can get in before the fact.


You can check this at moneycentral.com Got to earnings estimates, and click on consensus estimates. You can see if they're being raised or lowered.
 
I don't do much swing trading but was thinking about it recently. Someone with more experience and knowledge can comment on my thoughts and either affirm or call BS. I was thinking the best way to swing trade was to run a long short book, so basically for every long position you pair it off with a short. You should use up moves in the market to establish short positions in weak stocks and down moves in the market to establish long positions in strong stocks. Book real profits and carry paper losses. To find strong/weak stocks, some sort of Relative Strength vs SPY indicator would work. Something as simple as comparing RSI's of SPY vs individual stocks, or using moving average alignments or differences in short vs long MA's in the name vs SPY. In addition, you could filter by exchange, average daily volume, 40 day ADV vs 5 day adv (if recent volume is greater than average, this may indicate institutional buying or selling which will help your trade), Price, and maybe even sector if you like diversity. Anyway, these were just my theoretical thoughts and have not been put into practice, so comments/flames are welcome!
 
A filter you might find helpful.

1. Price $10.00 - $50.00
2. Volume: Greater than 400,000 shares traded daily
3. Float: 5 million to 60 million shares (daily)
4. Positive Earnings
5. Insider Owned Shares > 5%
6. Institutional Owned Shares > 5%

You could narrow the list further by choosing to focus on equities which show a cycle of 20% (or more) Price improvement over a period of 6 to 8 days a minimum of five times in the previous six months.

- Spydertrader
 
I've found it easier to watch a basket of 25-30 stocks and wait for my setups rather than try to screen the entire universe of stocks which meet my setup criteria. This basket is fairly diverse across industries and contains the main ETFs (QQQQ, IWM, XLF, etc), a bunch of commodity stocks (Gold, coal), some heavy industry (CAT), semis, some tech, and a few "pet" issues. It seems that most things follow the general market more or less and my problem with screening was that when the market gets oversold/overbought, I get dozens upon dozens of setups, many of which appear similar, so then it becomes a major pain to filter them out or try to execute.
It's made it far easier just to watch and wait and let the trades come to me. Yep, I'm sure I miss a bunch of trades, but oh well.
 
Quote from rgilbert93:

I know this is a bit of broad question but what do you guys do to narrow down the thousands of stocks out there in the beginning? A few of the things I use ( so far unsuccessfully) are:

Beta
sharp volume increases
EMA crossovers (I guess that would be the correct term?)

Do you guys use these things too? If not, what do you use?

Do certain technical indicators work better for shorting a stock? For going long? Any details provided would be GREATLY appreciated. Thanks
More...

Limit your stocks to the ones institutions trade, and then watch for buying and selling pressure. Big money cannot hide, they can be spotted. And if you get your own signal at the same time when you spot buying/selling pressure then you have much higher probability for a large move because the hedge funds try to front run them and they both accelerate the moves.

Forget about earnings, earnings are for investors. Sometimes you can have fundamentally very strong stock, but if the institution has accumulated too much of it, it will dump part of it’s position sooner or later to reduce it’s exposure. Watch price and volume, forget about indicators, they’re only give you false sense of confidence.

Forget about analysts's comments and reports, large institutions have their own research teams, and will have any information sooner then the public. Only upgrades/downgrades from analysts from the very large institutions can impact the market. You cannot compete with their research teams, learn to read price and volume, instead of reading other subjective things and manipulated things. :)
 
Quote from Mr.Consistent:

Limit your stocks to the ones institutions trade, and then watch for buying and selling pressure. Big money cannot hide, they can be spotted. And if you get your own signal at the same time when you spot buying/selling pressure then you have much higher probability for a large move because the hedge funds try to front run them and they both accelerate the moves.

Forget about earnings, earnings are for investors. Sometimes you can have fundamentally very strong stock, but if the institution has accumulated too much of it, it will dump part of it’s position sooner or later to reduce it’s exposure. Watch price and volume, forget about indicators, they’re only give you false sense of confidence.

Forget about analysts's comments and reports, large institutions have their own research teams, and will have any information sooner then the public. Only upgrades/downgrades from analysts from the very large institutions can impact the market. You cannot compete with their research teams, learn to read price and volume, instead of reading other subjective things and manipulated things. :)
More...

Excellent post.
 
What to trade?

You can focus on the news of the day and try to ride the reaction - FDA announcements, pre announcements, mergers, catastrophe (hurricane damage to oil rigs, refineries), product recalls, etc..

You can focus on earnings announcements (directional or trade volatility via options).

Or perhapts either some stocks in a sector that's volatile (gold, oil) or volatilie stocks that are popular (AAPL, AMZN, BIDU, GOOG, etc.).

Unless you can program or have a program that can screen for criteria you set, just pick a modest number of stocks that interest you, follow them and get to know them. Instead og thinking about the 1,000's and 1,000's of stocks out there and how you will screen all of them, just find a few to succeed with and then increase the number slowly.

My 2 cts...
 
MACD can be good in swingtrading
tr
 
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