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Finding Stocks in Upward Channel Topic Rating:
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bcochrane
Posted : Friday, February 23, 2018 7:54:31 PM
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Joined: 9/17/2010
Posts: 372

There have been earlier posts about finding stocks in an upward channel, but none were (to me) satisfactory. Perhaps because they dealt with the issues of how to define a channel in a PCF (you can't) and what is one's definition of a channel. For example, I have looked atother sites (forgive me, Bruce) and looked at price which was identified as in a Channel and reacted - you have to be kidding!

I have stumbled onto a method which appears to me to be satisfactory, and I thought I would share it with the two or three who might be interested. I call it Steady Eddies, getting away from the channel conundrum. It is only possible (I think) in V17 or later, because it depends on CountTrue.

If a stock is moving up steadily, then a faster MA will consistently be above a slower MA. So the main filter or search criteria is

CountTrue(XAvgC8>XAvgC21,135)

This returns the number of days where the EMA 8 > EMA 21 over the past 6 months. At the time of writing, there are (or were) 13 stocks where this relationship was true 130 or more days (within R3000).[Time of writing is Feb 23, 2018.] Results will vary over time, of course. Seven stocks met this criteria 134 or 135 days of the period. You will need to eyeball the results of your scan to determine if the results are satisfactory to you.

Some comments on parameters.

The 8 and 21 periods ema's were used because they come from John Carter's Propulsion strategy. You might want to experiment with different periods. There is nothing magic about the periods I chose.

Why six months? I have observed Steady Eddie periods up to 18 months, but if I moved the limit out that  far I might be cutting 12 months of profit off my opportunities (Hope that makes sense to you - I don't want to enter at the end of the trending period.)

Daily time period - suits my profile as a trader End of Day (EOD). I do have a column with the PCF CountTrue(XAvgC3>XAvgC8, 30) in a weekly time frame. THe results between the two time periods seem to correlate pretty well, and I didn't see any advantagein using the weekly time frame (but I could be wrong). Shorter time periods may be suitable to day traders and others.

How might one trade this?

Watchlist: I use a watchlist I maintain manually based on IBD and CANSLIM. Basiccaly the IBD 50 , with others thown in as I see them. eg Stock Grade A or A+, Comp Rating > 90.Basically trying to find stocks with strong fundamentals. But one could use any stock list (I think). Small cap (R3000 or SP600) might be a useful list. Up to you.

Ranking Stocks:If Stock A and Stock B both retrun a Steady Eddie score over 130 across 6 months, which one would I chose?

  1. Move magnitude over the six months (100 * ((MaxC- MinC125) /MinC125)) or
  2. Slope Linear Regression 30 or
  3. Slope EMA 20 or
  4. any other technique you like 

Buy and Sell signals: What ever you like

If any one wants to see what is returned by the PCF without setting it up., the best six (Steady Eddie Score = 135) at time of writing are: MTCH, IBKR, BA, EL, HRS, XYL. SteadyEddie Score = 100 include GLYC, CONN, GRUB, BGC, HRI, LGIH amongst others

Hope this helps you. Any questions, post and I will attempt to answer

Bruce_L
Posted : Monday, February 26, 2018 11:02:58 AM


Worden Trainer

Joined: 10/7/2004
Posts: 62,499

Thank you for posting this. It is very creative.



-Bruce
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