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5-23-16 at the open
The market is about to open. I notice in the futures market that the dollar is up, and gold is down. Watch lists are updated.
I have modified my watch list preparation method. I use automated techniques to produce candidate stocks. Harry (in this group) ably assisted me in creating the automation using MatLab. I first export the entire MarketSmith database of stocks trading above $5. I then create three ratings: Liquidity, Demand/Supply, and Margin ratings. I then sum these 1-to-99 ratings with the IBD Composite Rating. After selecting the top 10% of the Combination, I filter the results for CANSLIM parameters such as Accumulation/Distribution, SMR, EPS, ROE, PreTax Margins, and proximity to a recognizable buy point. I then inspect the charts of the list to produce the final result. The change to the process involves IPO stocks and the Growth 250. I widened the screening process to admit more IPO candidates to the final review. We also added Growth 250 stocks near a buy point. The Growth 250 stocks are created by a proprietary process by William O'Neil Data Systems. After a fundamental screening process, they use pattern recognition to identify bases and buy points. The stocks produced are relatively good candidates within 5% of a classical buy point.
The MarketSmith screener will only search the NASDAQ and NYSE exchanges. BATS may be an attractive candidate. Since BATS lists on the BATS exchange, no MarketSmith screen will include BATS in the results. BATS has formed an IPO base with a buy point of $27.50. CANSLIM practitioners don't buy IPOs when they first list. Instead, we wait to see if the price action will form a pattern of tight closes of at least 2 weeks long. The buy point occurs when the price clears the pattern to the upside. For a model book stock example, GOOGL cleared a three week IPO base in September 2004.
The watch list stocks that I upload each weekend to the High Growth Stocks area on this site are the results of the above processes plus my inspection of the results. I usually toss out 90% of the automatically identified candidates.
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Mike - I have recently made the switch from MarketSmith to HGSI. There has been a learning curve, that's for sure. From previous posts, I understand that you use both.
Since you have a knack for making complicated issues easier to understand, do you have any suggestions or tips for screening with HGSI for former MarketSmith users?
Any help is greatly appreciated.
Thanks,
Sean
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[QUOTE=Sean;31216]Mike - I have recently made the switch from MarketSmith to HGSI. There has been a learning curve, that's for sure. From previous posts, I understand that you use both.
Since you have a knack for making complicated issues easier to understand, do you have any suggestions or tips for screening with HGSI for former MarketSmith users?
Any help is greatly appreciated.
Thanks,
Sean[/QUOTE]
Sean, I no longer use HGSI. It is a powerful but complex program. HGSI uses "as reported earnings." MarketSmith uses operating earnings, where a team of financial analysts removes nonrecurring items. Either view of earnings is valid, but different and there is a debate as to which is best for growth stock investors. Just be aware that there is a difference.
Because of the trendless market, most investors have been pulled into shorter term trading. The HGSI crowd is no different in this respect. I am the opposite kind of trader; I go longer term. HGSI has an ample set of tools for the longer and shorter term traders. Their new volume analysis tools are short term in nature. Jerry, who produces the daily Leaders Index commentary, uses both programs. Your question might best be directed to him. Fred Richards (not a member of this forum) is an experienced investor and is a recent convert to HGSI as is Gil Morales.
I am not sure how HGIS will conduct seminars in the future. They used to hold a three-day seminar in Palos Verdes, CA every Spring and Fall. One of the anchors of this workshop, Ian Woodward, has fallen gravely ill. The sessions were quite good.
