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Registered User
Joined: 12/23/2004
Posts: 6
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Would you please suggest a scan / or scans that works well for finding short prospects
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Worden Trainer
Joined: 10/1/2004
Posts: 4,308
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This is beyond the scope of what we can cover here in the Ask a Trainer forum. If you can tell us what you think makes a good short candidate, we would be happy to show you how you can scan for the conditions you name (to the extent that what you're asking for is possible in TeleChart).
- Doug
Teaching Online!
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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What makes a stock a short prospect for you?
What classifies "works well"?
We need you to elaborate....
- Craig
Here to Help!
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Registered User
Joined: 12/23/2004
Posts: 6
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What has been working for me as of late is finding stocks that as the price is Rising, TSV, Money Stream, are Falling.
Also, Head and shoulder formations and double tops with weakening volume on right shoulder...........also Weak tsv and money stream confirming the weakness of price...........
I have also had success with using the 50 day and 200 day moving averages as support and resistance areas.
I dont have time to keep searching one stock at at a time visually and need to come up with a scan to narrow down prospects with scans.
thanks for your time-
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Registered User
Joined: 3/4/2005
Posts: 40
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My short canditates have:
TSV crossing 0 from + area
ADX line on upslope, i.e., trend is strengthening
OBV line on downslope, i.e., distribution increasing
Price moving average on downslope
The important thing here is to catch the price at the begining of the trend. Dawdle a few minutes and the opportunity is gone!
G
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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Here are some MoneyStream sorts you will like. They are already in the system. The best way to understand what they mean is to sort a WatchList by them and look at the chart:
MoneyStream versus Price 1-Yr.
This is the difference between MoneyStream as a % of its one year range and price as a % of its one year range.
MoneyStream versus Price 3-Mo.
This is the difference between MoneyStream as a % of its three month range and price as a % of its three month range.
MoneyStream versus Price 3-Yr
This is the difference between MoneyStream as a % of its three year range and price as a % of its three year range.
Here are two videos that show nifty methods for uncovering divergences:
Using Linear Regression Sorts to Help Spot Divergences
Comparing indicators using Visual Difference sorts
With the second one, sort any WatchList by the Visual Difference between price and MoneyStream or TSV, etc. The ones with the largest positive or negative visual difference are your best divergent candidates.
You can also use this same method to search for price touching the moving average for support or resistance.
- Craig
Here to Help!
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Registered User
Joined: 3/4/2005
Posts: 40
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Also,
All that stuff about patterns, cup and saucer, head and shoulders, penants, etc etc is just a lot of pareidolia, where one sees something that isn't there. It's so subjective. Rock solid technical indicators OTOH, are discrete and objective.
G
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Registered User
Joined: 3/1/2005
Posts: 31
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I've been shorting as my primary strategy for the last year with about a 70% success rate with an average gain of 15% within 15 days.
The first thing to understand is that stock price is based on people's perception of stock value, not company value. The concept of a perfectly efficient and unpredictable market is fine for the long run but bogus for the short term.
I've researched over 10,000 stocks meeting a basic screen of a 1 day %gain > 5% and have analyzed over 1,000 stocks meeting additional selection criteria for analysis. I've found the following statistical results which I use in trading. >80% of "High Flyers" will drop 20% from their last closing high within 16 days or less. A "High Flyer" is a stock that goes up > 56% within 3 days or less. If it goes up 25% to 55% the same results work for a 10% gain.
I've been with TradeStation until about 2 weeks ago and developed and wrote all my own indicators. I've had to redo them here with help from others. You might benefit from that.
The first thing is to go to the discussion on Acceleration Bands I started for help in transfering my indicator to TC2005. It's at How do I get Last week and last months High Low Close? Once you have the bands displayed on your chart the rest is easy. Do a basic scan using all stocks with a minimum volume of your choice (I use 40,000), a minimum price based on your broker's requirements for shorting (I use $2.00) and a minimum one day gain of 3%. Many stocks will do a big gain with a small gain following. If all you look for are the big gains you'll miss these. Take the 1 Day-%Gain and the 5 Day-%Gain and use one to change to a 3 Day-%Gain. Use all three in your watchlist analysis.
Once you have the scan onto a watchlist sort and eliminate everything less than 25% for 3 days EXCEPT those with a 5 day greater than 25%. Now scan through the stock quickly looking at the charts. What you're looking for is a significant (sorry that's the best I can do to describe it) breakout above the upper band. Once you've selected these look at the 5 or 10 minute bar chart to see when the biggest price increase came on the alert day (today). If it was in the morning and it's flat or coming down, good. If it's continued to go up all day and is up at closing, pass it by or wait and check it the next day.
Once you have the final candidates, check the news. What you're looking for is an indication of an over reaction. A bogus reason for price up could be a report (true news but bogus for price drive) of a drug company reporting a completed and good data on a Phase II trial - nothing is sellable until Phase III is done usually at least 12 to 18 months later. An over reaction could be a 40% price increase following a 15% earnings surprise on the recent ER. These kinds of things get people excited and they jump in without understanding the process. When they get in at the top and see it peter out they panic and try to exit quickly. As they do the price goes down and those that bought just below them do the same as the decline gains momentum. The final balance of this process is usually over by day 16 and usually at a level of about 40% of what the highest high was in the run. One thing to avoid is any news about merger, buyout or take over. These go up and peg.
For entry give the 'High Flyers; (>56%) a 6% pullback before entry (this eliminate about 75% of those that continue to go up) while on the rest your entry should be at market the next morning. Make sure you put a 10% stop loss in place immediately upon entry to save your bacon if it's wrong. Use a trailing stop of 4% above the lowest high in the run since entry.
Good luck,
Dr. Ken Rich
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