Watchlist 2014-11-26

http://finviz.com/screener.ashx?v=211&t=flws, z, trla, achn, infi, anac, cnat, mack, mik, outr, cemp, eght, ctrx, rt&ta=0

These were good candidates at the close of Wednesday (11-26). Nearly all these stocks did not have follow through on this black Friday (half session). The actual action was up in the early morning, then went down afterwards and close at low. The airline, retail stocks were up. The oil, gold, solar stocks were down sharply due to the OPEC announcement. The oil price plunged around 10%.

GMI from Wishing Wealth Blog

http://wishingwealthblog.com/2005/04/the-wishing-wealth-general-market-index/

GMI stands for general market index. It is a market breath indicator developed by http://wishingwealthblog.com/.

Today wishingwealthblog posted a blog which shows the GMI performance since year 2006

http://wishingwealthblog.com/2014/10/gmi-performance-since-2006-gmi-flashes-a-buy-gbl-rcpt-takes-off-glb-ew/

I copied the image as shown below. The rule is

Sell if GMI went at 2 or below for 2 consecutive days
buy if GMI went at 4 or above for 2 consecutive days.

Bullish Percent Indexes from Stockcharts

Bullish Percent Index for the Nasdaq Composite ($BPCOMPQ).

percentage of stocks above the 200 Day Moving Average ($NAA200R)

percentage  of Nasdaq stocks above the 50 DMA. ($NAA50R)

$BPNYA

New York Composite Percentage Of Stocks Above The 200 DMA ($NYA200R).

percentage of stocks above the 50 DMA ($NYA50R) 


$BPSPX and $BPNDX


http://stockcharts.com/articles/chartwatchers/2014/09/bullish-percent-indexes-close-the-week-lower-as-new-highs-on-the-indexes-are-made-.html

Finding Continuation Triangles And Wedges With Telechart (zz)

http://forums.worden.com/default.aspx?g=posts&t=26559


The chart is created by 4 things...

1) The custom indicator (h*1.01) - this represents a point 1% higher than today's high
2) The custom indicator  (l*.99) - this represents a point 1% lower than today's low
3) A 10 day linear regression line of #2
4) A 10 day linear regression line of #3

Now you can sort for the dragon which is a very easy process.  First, I sort my watchlist by the 10 day linear regression of the high blue line looking for stocks that have a sort value of 0.10 or less.  Then I space bar down the list looking for candidates which are very easy to spot.



The dragon candlestick pattern PCF
C > O AND C - O < (H - L) / 2 AND (AVGH3.1 - AVGL3.1) / (MAXH3.1 - MINL3.1) > .8 AND C > MAXH3.1

if you want more consolidation days, just change the 3 in the formula with whatever number of days you want

The Fishhook Setup by Scot1and

http://educsos.blogspot.com/2014/09/the-fishhook-set-up.html

I see this strategy works quite well recently. Scot1and looks for the low priced stock (I believe <$5) with prior negelect, then suddenly one day with a big breakout. The strategy is to trade the upside momentum continuation after a few days pullback (within 5 days after the breakout). The entry is prior to the close on  the very first up day. The stock should close at HOD or close to HOD on the up day. Usually the stock should gap up the next day. This is a short term trade. I find out that stock can go up till 12pm next day then fade away. So it is important to sell into strength to take profit.

I think recently the stock UTHR also qualified for this strategy. The entry should be on 08Sep then sell next day. Even though UTHR is a high priced stock, it has the same behavior.

Vehicle identification with the initial thrust is important.

Sentiment: Open Interest Configuration

http://www.schaeffersresearch.com/schaeffersu/expectational_analysis/open_interest_configuration.aspx

Sentiment: Open Interest Configuration

To analyze stocks, we often use option open interest as a means of measuring the relative levels of investor optimism and pessimism. Open interest is the number of outstanding contracts on an option class or series. Open interest will increase by 1 contract when a buyer enters a new long position while the seller is entering a new short position. Open interest will decrease by 1 contract if a buyer is closing an old short position and the seller is closing an old long position. And open interest will stay the same if:

• A buyer is entering a new long position while the seller is simultaneously closing an old one, or,



• A seller is establishing a new short but the buyer is simultaneously closing an old position.

One way to use open interest to analyze sentiment on individual stocks is to examine the "open interest configuration" using front-month option data. The open interest configuration of a stock is simply the number of open puts or calls at the various strike prices and can be illustrated by plotting a chart with adjacent call and put bars representing the open interest at every strike price. This approach has proven effective in determining possible resistance and support levels. How?
Option strike prices are usually round-number levels that tend to serve as support or resistance, as buyers view pullbacks to such levels as good entry points for long positions or potential closeout points for short positions. Sellers, on the other hand, look to rallies to round numbers as opportunities to exit long positions or to establish short positions. The fact that there may be significant option open interest at strike prices corresponding to these round-number price levels serves to accentuate their significance as support and resistance.
Often times, you will see us reference how out-of-the-money peak call open interest can act as resistance and out-of-the-money peak put open interest can provide support for a stock. Here is an examination why and how open interest can act as support or resistance.
There are 3 reasons peak (or heavy) out-of-the-money call open interest can act as resistance:

• A large accumulation of call open interest can define a point of extreme market optimism, which usually coincides with the depletion of buying strength. When this strength is gone, it takes less selling activity to change the stock's direction.
• Those investors that sold these options may buy the underlying stock to balance their bearish position from selling the options. These long positions will ultimately be sold when the options expire or the call buyers unwind their positions.
• Finally, call sellers that don't hedge their position will try to pressure the market as it approaches the strike that the calls were sold in order to protect themselves from losses.

Let's take a look at the 3 reasons that peak (or heavy) out-of-the-money put open interest can provide support:

• A large accumulation of put open interest can define a point of extreme market pessimism, which usually coincides with the depletion of selling strength. When this strength is gone, it takes less buying activity to change the stock's direction.
• Those investors that sold these options may short the underlying stock to balance their bullish position from selling the options. These short positions will ultimately be bought back when the options expire or the put buyers unwind their positions.
• Finally, put sellers that do not hedge their position will try to support the market as it approaches the strike that they sold in order to protect themselves from losses.

some reading quotes

The ideal set-up is a stock emerging from a constructive consolidation with strong accelerating earnings and sales.

optimal position size should be based on their own risk/reward and risk tolerance. For instance, if you’re a 2:1 trader, your optimal position size is 25%.

The research shows that EVERY bull market in history has had an accumulation day (also referred to as a “Follow Through Day”, or FTD) as a prerequisite. So, there is little reason to look for a new bull market without first having the FTD occur. Trying to pick the bottom turning point is a fruitless exercise, so we wait for the market to prove to us that a bottom may be in place.