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The prescreened lists are about probability.
There are different kinds of screens. You are asking about the Value Line Timeliness 100. That infers that the stocks on the list have a high probability of moving up in very immediate future. Well, to find those stocks a momentum component has to be added to other quant and fundamental variables to increase the probability that the price move will be sooner rather than later. Timeliness rank!
When momentum is a component of any screening method it often finds stocks that have already started the move. Many of the prescreening methods for picking stocks have momentum incorporated into the screen. Not all do, but many of them.
If you want to catch the moves really early, then you'll have to use other value line measures to create a watchlist. Then you can buy whatever you think is making a move. Of course, you'll have way more losers this way because the probability that any upward movement of stock will continue over the long run is lower than the probability that a stock with established momentum will continue its upward movement. Now you're playing the game of finding one or two big winners out of every 20 stocks you buy. That gets written about in trend trading books and has real appeal.
However, there is another way to look at it. I like to have 6 to 7 winners out of every 10 stocks. Right now I have 32 out of 35 up significantly. I've been buying them for the last 5 months. In order to do that some of the ones I bought were already showing signs of a trend, so I'm going to miss part of the upside. (The time to sell is close at hand!)
I've said many times on here and in trading articles, I don't like day trading and I'm playing this game for consistency, not maximum return. Despite degrees in the mathematics of optimization, I've said that when anyone tries to maximize or minimize anything, the tendency is to break it. What that means is if I try to maximize my profit, then I'm likely to make less and cause a consistent reliable system to fail. The same is true if I try to minimize my losers.
When I look at a stock that has already shown upward momentum, I look at the reason for momentum. Is it because of the overall market direction, because of some very special about the stock, are traders buying the potential of something, are mutual funds starting their portfolio fills with this stock, and a variety of other reasons. If it is because of the overall market direction, the question is what is the probability the upward momentum will continue. If the market is in a trading range, how long do the swings last? The reason a stock is moving up is also the answer to how long it is likely to continue to move up.
Day traders don't care about these issues. Longer time frame traders do.
It's all in how you want to play the game.
With the Value Line T100, I don't remove any stocks from the list for the entire year. I add the new ones. When I add the new ones, I look at where they are in terms of momentum. I leave the old stocks on the list because they can lose their momentum for awhile and then make a new run without making the list of 100.
Value Line only adds 1 to 5 stocks a week to the list. If you want to catch the earliest moves, you have to buy from those few or you have to buy the ones that are coming around for a second run.
You can look at stocks that are moving up the timeliness ranks. You'll see them when they are a 4, a 3 or a 2 before they make the T1 list.
There are a thousand ways to use Value Line data. Some of the guys on Motley Fool take the T100 list and screen a second time. They then keep the highest ranked stocks in the second screen until they are replaced on the list. I've back tested that strategy on a buy and hold (1 to 6 months) and it is consistently profitable. But it has losing times like any other strategy.
Nothing is perfect, nothing works all the time and nothing works better than the person using it.
Super
--- In equismetastock@xxxxxxxxxxxxxxx, "metastkuser" <andysmith_999@xxx> wrote:
>
> I signed up for the trial version of Value Line and just looked at the charts of the T-100 stocks. The ones with good charts started their upward trend a few weeks ago... and of course, I have to ask the obvious question: Have I missed the move? How do I catch the move earlier in the trend?
>
>
> --- In equismetastock@xxxxxxxxxxxxxxx, superfragalist <no_reply@> wrote:
> >
> > Yes, I've back tested some of the AAII screens, but my results are based on my style of trading, not yours. Like the VL stocks, AAII provides performance history numbers based on their method of trading, so there is history to look at.
> >
> > VL stocks are core stocks. VL only analyzes around 1600 to 1700 stocks out of the whole market to come up with the T100.
> >
> > Many of the AAII screens are low volume small cap stocks, which are hard to trade. But some traders prefer small caps with low volume. Many of the screens produce only 3 or 4 stocks per months. Some of the screens have books written about them so the logic and historical testing on those is extensive.
> >
> > While I like AAII screens overall, it takes a lot more time to find the stocks with the best probability of success from their many screens.
> >
> > If you have an account with Fidelity you can buy Value Line at a significant discount.
> >
> > Trading from any list of prescreened stocks that have a long track record of success will improve the trading performance of many systems, so using AAII for candidates is likely to produce better results than using some kind of TA screener.
> >
> > Super
> >
> >
> > --- In equismetastock@xxxxxxxxxxxxxxx, "metastkuser" <andysmith_999@> wrote:
> > >
> > > Super, have you backtested any of the Stock Investor Pros screens from AAII? I have SIPro and don't want to run out and buy VL just yet...
> > >
> > >
> > > --- In equismetastock@xxxxxxxxxxxxxxx, superfragalist <no_reply@> wrote:
> > > >
> > > > Very few people on here know anything about those. Yes, they work. They always do.
> > > >
> > > > Super
> > > >
> > >
> >
>
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