- I review all the major indexes ($SPX,$DJIA,$RUT,$COMPQ) performing technical analysis on them. I ask my self, if this were an individual stock; would I buy, short or stay away from it at the moment.
- On top of this, I over lay the trends in the $T2118(Freestockcharts.com)and the $BPNYA and $BPCOMPQ (Stockcharts.com) relative to their 10 day SMA to get an objective determination of the markets intermediate term trend.
- I also add the readings of the $NYMO or $T2106 to determine if the markets are at an extreme level.
- On top of this, I use FINVIZ to look at all the stocks that are up 4%+ for the day on 100K share or more volume and all stocks above $3.00 down 4%+ for the day on more than 200K volume. I do this to look for sector themes and occasionally I pick up stock ideas here. So for instance, I might see a lot of solar stocks breaking out of bases and this will tell me I need to pay closer attention to this group/sector.
- I then browse all of the major sector/industry ETFs and country ETFs to see where there is relative weakness or relative strength.
- I want to have the sectors/industries to stay away or look to short and which ones to get long at the back of mind when I'm doing my scans for individual stocks. So for instance, if I notice that bio-techs are leading the market higher while coal stocks are lagging, then I'll be looking for individual bio-techs with bullish set ups and individual coal stocks with bearish set ups while doing my individual scans. Further if I see a coal stock that looks bullish; I'll stay away from it since the sector is weak!
- I like to trade stocks that have had a recent injection of liquidity and volatility after a long period: weeks or months of dormancy. Usually this is caused by some unexpected news event like earnings, FDA approval or new contract announcement etc. So basically I like to trade stocks that had a recent game changing catalyst or one on the horizon.
- I find these stocks by running several scans. I run one scan looking for stocks under $20 in up trends; stocks under $20 near 52-week high; stocks with a high short float; stocks with high earnings growth in its most recent quarter and by looking over my hot stocks list. I also scan for stocks that are down trending to look for short plays.
- I also get some good ideas from twitter occasionally. I highly recommend following @szaman @fousalerts @kunal00 @mb_willoughby on twitter!
- When I see an actionable set up; I add it to my "focus list". When I see a stock that I like but is not necessarily buy-able; I add it to my "hot stocks list" in Freestockcharts.com. When I see a stock that I think can make a big down move but is not yet actionable; I add it to my "Potential Shorts" list.
- An actionable set up is like flags, pennants, bottoming bases, cup with handles, head and shoulders tops etc.
- Before I add an idea to my trading platform; I do further research trying to under stand the story of the stock; what catalysts could push it higher but I also look at the risks involved especially if the company has any important news releases on the horizon.
- I then transfer my final list to my trading platform and set alerts for the levels at which I would be interested in getting long or short the next trading day.
- I try to post this final list of ny best ideas to my blog before the open but sometimes life gets in the way...lol
- I also try to post the ones I like most on twitter.
The following links shed some light on my stock selection criteria:
In fact, the stockbee site is a great website for anyone interested in swing trading. I strongly recommend becoming a member of this site if you're looking to become a profitable trader long term.