ManyPeaks.com

This is a screen shot of my main monitor, which usually contains the TeleChart stock scanning and charting program.

I use rely heavily on both of those functions. To find low-risk trading opportunities, I use several proprietary “EasyScans” that I devised myself, as well as some that I’ve picked up from other traders.

I use a price and volume filter on all these scans.. eliminating penny stocks and those lacking sufficient liquidity..when I want to get out, I want to be able to get out !! For me, a stock typically must be over $8 in price, and have average volume of 200k shares over the last 5 days.

What am I searching for? Strong uptrending stocks that are in a pullback or sideways-trading phase. My best scanning method is simply sorting all “Long Swinger” candidates (20 day moving avg over 50 moving avg over 200 moving avg) by “% ADR6″ — which is today’s high-to-low range divided by the average high-to-low range of the last 6 days. But this is a ton of work.. the list of stocks qualifying as Long Swingers numbers about 900 as of today.

So, I am constantly trying new scans to further whittle down the possible trading opportunities. As a trader who primarily plays the presumed resumption of of an existing trend rather than trying to pick tops and bottoms.. I’m primarily looking for stocks experiencing Range Contraction. So many tradeable trend continuations are directly preceded either simply by this condition or by a combination of RC and a shakeout / spike day (known as a “hammer”). Having been shaken out on those hammer days many a time, I can attest that the second scenario is actually much better. Refer to my first postings of FWLT charts in late June for a look at a stereotypical shakeout day.

My newest Scan is dubbed “Shake & Chill”.. like a martini.. developed because of the shakeout factor mentioned above. I want to get in after the (seemingly) requisite shakeout day.. being already long on those days is stressful !!

Shake & Chill identifies uptrending stocks that are at least 5% off recent highs, made a hammer yesterday and formed an NR4 - narrowest range in last 4 days - today. Here’s what happened there.. in plain English .. , a strong stock is in pullback mode, many traders were shaken out just yesterday on a temporary mid-day selloff, and today the thing hardly moved as the last holdouts from the previous leg of the move probably sold out of pure boredom.

I play this setup by bidding for some the next morning, and definitely buying on a break of the NR4 day’s highs if my lowball bid isn’t hit.. using the recent spike low for a stop-loss point.. at that point, I’d be Wrong.

ps. that happens with regularity.