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<DIV><FONT color=#000000 size=2>All,</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT><FONT size=2> I'd
like to start a discussion on how to narrow the universe of stocks to a few
potential trading candidates that have certain characteristics that have
resulted in successful trades in the past. I'll explain what I do and hope
you chime in with comments on additional suggestions or comments on why you
believe what I'm doing is wrong.</FONT></DIV>
<DIV><FONT size=2> First I believe that there are many
different selection techniques that work and there are times when one technique
will work better than others. For example, large cap momentum selection
searches have worked exceptionally well for the last three years and small cap
value techniques have not. However, if you look back in history, that's
very unusual because small cap value techniques have worked better on average
over the last fifty years. I also believe that the mirror image of a
search for long candidates isn't necessarily a good search for short candidates,
but I don't want to get into that today. I test the market indices to
decide if my new positions should be long or short and my new positions have
been long positions for some time now, but that is also the subject of a future
post <G>. To keep this post fairly short, I want to
concentrate on searches for long stock candidates only today.</FONT></DIV>
<DIV><FONT size=2> I use several different searches to
select the few (less than 200) stocks that I keep in my MetaStock
database. My searches are only to find stocks to add to my database and I
only add a few each week. (I also prune my MetaStock database
periodically.) I look at the results of the searches and use my 20/20
eyeballs for my final decision. I used to use Telescan for this by
recently dropped them due to cost and bad data. I'm now using QP2 for my
daily and historical data. It does have a built in search capability using
a combination of fundamental and technical data. However, I'm just
learning its programming language and it doesn't have a lot of criteria to
search on. Still, I believe it has great potential and understand that
they may add additional fundamental data after the first of the year. In
the mean time I'm using Microsoft Investor and eSchwab search
capabilities.</FONT></DIV>
<DIV><FONT size=2> What I'd like to do here, is not give
the search formulas, but rather discuss the criteria I use for the various
searches. I'll be glad to share the QP2 searches after I finish
them. I've found that for fundamental criteria, the price/sales ratio by
itself works best for me. I can enhance it's performance by also using
debt/equity, and various earning and revenue growth criteria. Today I'd
like to describe a momentum breakout search CANSLIM that I use for both large
and small cap stocks; a bottom fishing search BotFish; a value growth
search,ValuGro that can be used for both large and small cap stocks; and a small
cap search, SmalCap. You will see my favorite criteria used in most of
them.</FONT></DIV>
<DIV><FONT size=2> CANSLIM is a momentum search that
I've been using for a long time that is based on parts of the CANSLIM
strategy. What it looks for is stocks that are trading at a new 52 week
high on high volume and meets several other conditions. In all my searches
I begin by limiting the stock to a price above a minimum and below a
maximum. For CANSLIM that's 5 and 144. Then I ask the search to list
the 52 week high and the 52 week low for my info on making a final decision on
adding the stock or not. The search continues by limiting the selection to
those stocks which are in the top 20% considering earnings per share growth and
the top 20% considering price growth over the last year. Then I ask for
group rank, fundamental rank, 30 day average Volume, and 3/30 day Volume to be
as high as possible. This doesn't limit the selection, but helps rank the
selection and I only take the top 20. I also ask for analyst rank to be as
good as possible, institutional holding to be as low as possible, market cap be
as low as possible, and insider trading to be as high as possible
(buying). Finally I ask that the stock has set a new 52 week high within
the last 5 days.</FONT></DIV>
<DIV><FONT size=2> BotFish is a search for stocks that
have been beaten down and look like they are bottoming. It looks for
stocks that are trading at 50% or more below their 52 week high but still have
decent fundamentals and are showing signs of recovering. I again start by
asking for a price between 5 and 21. I also ask it to list the 52 week
high and low. Then I ask that yesterday's close be lower than 1/2 the 52
week high. That makes sure that we are looking at only beaten down
stocks. To insure good value I ask that the Price/sale ratio be less than
1 although I sometimes raise that to 2.1. I may also use the same criteria
for price/book if that's available. I further ask that the price/sales be
as low as possible. I may or may not use a debt/equity below 1
requirement. I then ask that the annual revenue growth be greater than 13%
and that it also be as high as possible. I may or may not use the same
criteria on earnings growth depending on how much that limits my results.
Finally I ask that the 3 month relative strength be as high as possible to show
early signs of turning up.</FONT></DIV>
<DIV><FONT size=2> ValuGro looks for stocks that are
growing strongly yet are still good values as shown by low price/sales
ratios. It starts off asking for a close greater than 3 but then
asks for a price as low as possible. I also ask it to list the 52 week
high and low. I then ask for a price to sales ratio that is well below the
industry average. This way I get the benefit of a relative low price/sales
but don't eliminate stocks in groups that have higher price/sales ratios.
I then ask that the price/sales be as low as possible. I then ask that the
debt/equity be below 1. I ask for a market cap above 250,000,000 to
eliminate micro caps. I eliminate stocks whose price dropped in the last
quarter. I then ask that the quarterly price change, the annual revenue
and earnings growth be as high as possible. </FONT></DIV>
<DIV><FONT size=2> SmalCap looks for small cap stocks
that are showing exceptional earnings growth but are undervalued. It
starts by displaying the previous days close and the 52 week high and low.
It asks for a market cap less than 500,000,000. It asks that the 3 month
relative strength be higher than the 6 month relative strength. It asks
for annual EPS growth greater than 30% and projected growth greater than
30%. It asks for price/sales less than 1. Finally I display P/E,
ROE, and Debt/Equity.</FONT></DIV>
<DIV><FONT size=2> I run each of these searches
weekly. I then look at charts of the resulting lists on QP2 and decide if
I'm interesting in adding any to my MetaStock database. If they look good
I'll export the historical data to my MetaStock database and run my MetaStock
system tests on them. If they don't return better than a 100% profit on
one of my system tests, I'll delete them form my MetaStock database. The
point to remember is that these searches are not a stock selection system by
themselves, they are merely the first building block in my stock selection
system.</FONT></DIV>
<DIV><FONT size=2></FONT><FONT size=2> Any comments or
suggestions?</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>JimG </FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV> </DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV></BODY></HTML>
</x-html>From ???@??? Thu Nov 26 01:17:06 1998
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Don't you just drop it on the title bar?
Malcolm Scott
UG wrote:
> Speaking of tricks with indicators, is there any way to drop an
> indicator on the chart so that it has its own inner-window? I can do
> it
> by hitting Ctrl-I, but is there any other way?
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