Mike
03-01-2012, 09:13 AM
In a private note I was asked about organizing watch lists. Since this is might be a good topic for many, I decided to discuss the topic in the open forum.
Many I know use excel to manage their watch lists. Before I describe what I do I think I should mention what Bill O'Neil's watch list might look like. He will have a list of maybe ten stocks that he will be waiting to set up at a proper buy point. Ten stocks doesn't take a lot of effort to manage and can be done on the back of an envelope. Bill has laser focus.
I maintain a short watch list in eSignal, a real time stock charting program. I also keep other longer lists in eSignal. For example I maintain the entire IBD 50 and the IBD 85-85 lists in seperate pages which I will review during the day to see if something should be promoted to my watch list.
If you pay attention to the selection criteria below you will see how it is possible to build a short watchlist. This is straight out of my trading plan.
Preferred stocks to buy. The following general characteristics should exist before taking a position.
1. US Stocks, ADR’s are okay but none from countries where rule of law or transparency is in doubt (USSR, Venezuela, etc.)
2. IPO’s may be purchased. Prefer IPOs and ADRs who are underwritten by one of the following
underwriters:
a. Goldman, JP Morgan, Morgan Stanley, Merrill, Credit Suisse and Citibank are okay for the Chinese
stocks.
c. Liquidity (price times average volume) greater than $20M/day, greater than $40M/day is ideal
d. Minimum price $15 (NYSE) $20 (NASDQ). Consider the market, towards the end of a cycle where
stock prices have been bid up. Lower cost stocks (even $50 stocks) should be suspect at the end of the
cycle.
3. Demand/Supply (50dma volume percent of float) 1% or greater, 3% or greater is ideal.
4. Prefer higher quality CANSLIM fundamentals. Prefer stocks with:
a. Triple-digit EPS gains
b. 3 quarters of EPS acceleration
c. 3 Quarters of Sales acceleration
d. 3 Quarters of increased Intuitional Sponsorship
e. Pre-Tax Margin + ROE > 50%
f. Stock is owned by one of the high quality mutual funds. See list at end of document.
g. Satisfactory responses to the Three Questions:
i. Is this the very best stock I could own?
ii. Where is the stock in the cycle? Where is the market in its cycle?
iii. What do I think the stock pattern could be? This is important for an early entry before a
basing pattern is complete.
Many I know use excel to manage their watch lists. Before I describe what I do I think I should mention what Bill O'Neil's watch list might look like. He will have a list of maybe ten stocks that he will be waiting to set up at a proper buy point. Ten stocks doesn't take a lot of effort to manage and can be done on the back of an envelope. Bill has laser focus.
I maintain a short watch list in eSignal, a real time stock charting program. I also keep other longer lists in eSignal. For example I maintain the entire IBD 50 and the IBD 85-85 lists in seperate pages which I will review during the day to see if something should be promoted to my watch list.
If you pay attention to the selection criteria below you will see how it is possible to build a short watchlist. This is straight out of my trading plan.
Preferred stocks to buy. The following general characteristics should exist before taking a position.
1. US Stocks, ADR’s are okay but none from countries where rule of law or transparency is in doubt (USSR, Venezuela, etc.)
2. IPO’s may be purchased. Prefer IPOs and ADRs who are underwritten by one of the following
underwriters:
a. Goldman, JP Morgan, Morgan Stanley, Merrill, Credit Suisse and Citibank are okay for the Chinese
stocks.
c. Liquidity (price times average volume) greater than $20M/day, greater than $40M/day is ideal
d. Minimum price $15 (NYSE) $20 (NASDQ). Consider the market, towards the end of a cycle where
stock prices have been bid up. Lower cost stocks (even $50 stocks) should be suspect at the end of the
cycle.
3. Demand/Supply (50dma volume percent of float) 1% or greater, 3% or greater is ideal.
4. Prefer higher quality CANSLIM fundamentals. Prefer stocks with:
a. Triple-digit EPS gains
b. 3 quarters of EPS acceleration
c. 3 Quarters of Sales acceleration
d. 3 Quarters of increased Intuitional Sponsorship
e. Pre-Tax Margin + ROE > 50%
f. Stock is owned by one of the high quality mutual funds. See list at end of document.
g. Satisfactory responses to the Three Questions:
i. Is this the very best stock I could own?
ii. Where is the stock in the cycle? Where is the market in its cycle?
iii. What do I think the stock pattern could be? This is important for an early entry before a
basing pattern is complete.