Today’s Trading Lesson | Creating a List of Stocks to Trade
There are essentially three core strategies to build a list of stocks to trade:
- Core universe.
- Daily Scans.
- Industry Specific.
Of course there are infinite possibilities, but these are a solid foundation to build a steady trading income.
This is the list of stocks you consider trading every day, no matter what. They should have reasonable liquidity and excellent volatility.
Your core list is generally what one may consider “market” stocks. They follow the market well which means when the general indices are obvious, this list should produce consistent P&L.
This screen shot is a good place to start. This is an important list for anyone struggling to get beyond boom or bust results. When I began trading in 2000, we were actually taught to trade one stock every day. “Learn the stock and own it” was the phrase.
How big the list should be depends on your ability to process information. If you’re new, I recommend 5-10 stocks. Please be clear, I am not saying to trade all 10, I am say to scan this list for ideas that match your strategy.
This list is unique in that it changes every day. Generally you have a minimum scan criteria, then you scan every stock on Wall Street that matches that criteria. After that, you look for trading ideas.
For example, my criteria is: average true range of $1.50, average daily volume of 2 million shares, over $15 and stocks only.
You can see in this image of the scan, today (8-1-16) it produced a list of 84 stocks. From this list I will scan for order flow, momentum and profit targets. Two scans are performed, one for buying order flow and one for selling.
Industry Specific Scans
Many traders watch one or two industries and become experts. This is an interesting conundrum. There are periods of time where the industry could be “out of play,” which can test your patience. But…there are months, and years, when the industry is “hot” and your conviction level will be very high.
When order flow is obvious, you should be confident.
Many hedge funds and mutual funds are industry specific, so that should tell you the quality if this type of scan. A rule of thumb is to pick the top three to five leading stocks in the industry and specialize.
If you’re struggling with your consistency, choosing, and sticking to, one of these styles can be a great antidote to quickly turn things around.
If you have any questions please leave a comment.
On the Tape Today...
$TSLA / $SCTY merger expected to be announced today. (see chart)
$PEP two well-bid days and a profit target of $110.49 for a new long.
$LUV short sale below $36.50 with a target to cover at $33.96.
$CAH breakout above $84 shows a gap fill profit target of $86.37.
$SCTY 8-1-16 (Click to Enlarge)
U.S. stock futures rise amid waning expectations for a near-term Fed hike: Tesla, SolarCity among stocks in focus
Wall Street stocks were poised to start August on a positive note, with futures higher on Monday after last week’s soft growth data reduced bets for a Federal Reserve interest-rate hike in the near term.
Last week’s positive sentiment was carrying over to a new month of trading Monday, as the prospects for a near-term Fed interest rate hike appeared to fade. The chances of a rise in U.S. interest rates fell to 12% from 18%, Fed Funds futures data from the CME Group showed.
The market appeared to brush aside comments from Bank of New York President William Dudley, who argued Sunday that an interest-rate hike this year shouldn’t be ruled out. He made the comments in Bali, in remarks prepared for a joint central-bank seminar between the New York Fed and Bank Indonesia.
Stocks to watch: Shares in Tesla Motors Inc. TSLA, +0.19% and SolarCity Corp. SCTY, +6.74% could be active after a report in Reuters that the two could announce a merger as soon as Monday.Read More — >>
Stock Market Today: Heatmap of the S&P 500
Stock Trading Today 8-1-16 | $JNJ
Stocks End Mixed; Dow Breaks 4-Week Win Streak; Which Blue Chips Lead?
Stocks showed mild action Friday, but the Dow snapped a four-week winning run. In general, the market maintained a positive bent amid a week jam-packed with earnings reports and a data showing weaker-than-expected growth in the U.S. economy.
J&J continues to rise after recently posting a third quarter in a row of modest earnings growth. Q3 earnings are seen rising 11% to $1.66 a share, which would be an acceleration from the 2% increase which the medical and personal care products titan saw in the second quarter.
UnitedHealth has had a masterful performance since it broke out of a shallow double-bottom base at 121.19 in late February. The managed care behemoth rose 0.3% to 143.20, up 18% from that proper pivot point.
Ranking third in RS Rating among the Dow components is DuPont (DD). The chemicals giant is cozying up to the 70 price level, where it’s had trouble piercing higher. Earlier this week, DuPont marked a 14% jump in Q2 earnings, the best result in 10 quarters. Sales slid 8%, however.Read More — >>
Tape Reading the SPY ETF
$SPY continued its run of flip-flopping in the range on Friday.
We see no signs of distribution type price action and volume, so anticipating new momentum higher is the game plan for this week. The range is very well defined so I would be careful to not set a buy stop at the exact high of $217.30.
Buying a dip or a clean pause above that level is the better trade right now.
Stocks in Play: $AAPL research on finviz.com
$AAPL NEWS: Apple’s historic stock surge could confirm what Buffett already knew
Tech giant’s shares post 2nd-biggest price gain in history
The historic surge in Apple Inc.’s stock on Wednesday is finally giving investors something other than declining iPhone sales to talk about, and could confirm what Warren Buffett may have believed several months ago, that a bottom has already been seen.
The stock AAPL, +0.36% ran up 6.5% to close at a three-month high. The split-adjusted price gain of $6.28 was the second-biggest one-day rise in Apple’s history, in the wake of the technology giant’s better-than-expected quarterly results. It was just behind the biggest-ever gain of $7.10 on April 25, 2012.
(A 7-for-1 stock split went into effect on June 9, 2014, meaning the actual April 25, 2012 price gain was really $49.72).Continue Reading — >>
Stocks to Trade 8-1-16 | Monday Edition
Short-Term Trading Momentum:
Positive the last 20 and 5 trading days | closed 2% higher from the open: DVN, RICE, TAP, BHI, HOG, RH, MPC, PCD, NEM, SRPT, MDVN, JWN, X, TIF, JLF, LVS, GRUB
Negative last 20 and 5 trading days | closed 2% lower from the open: adp, hig
Quarterly Order Flow:
Bullish Stocks to Trade: HOG, AEM, TSLA, HLF, CELG, AMZN, COST, STT, AMGN, UNH, HD, VMW, UNP, AAPL, CAT, IBM, GRUB, FB
Bearish Stocks to Trade: bidu, gild luv, fslr, cvs, skx, cop
2x Normal Volume: XOM, WDC, HIG, NWL, HOG, TAP, WYNN, BISU, LYB, EXPE, GRUB
Inside days: fb, glw, csco, c, abt, orcl, wfc, bsx, azn, emc, dis, symc, nke, wmt, cvs, nov, vlo, ma, csx, axp, cof, bbt, unp, ip,