Volume Alert Trigger

[Mike]

While the volume alert trigger system is in the coding process, if it were working today the stocks below would have issued a possible buy alert trigger. The process behind the scenes is to extrapolate intra-day real-time volume to end-of-day and compare that volume to volume over the prior ten trading days. A stock that is trading close to the 50-day moving average or 10-day moving average with volume higher than any down-day volume in the prior ten trading days qualifies as a possible entry. This process runs on a preselected list of high quality growth stocks with great fundamentals. Today's list contains 59 symbols and six possible volume alert triggers developed during the trading day.

CLR looks to be bouncing off of the 10-week moving average and is considered a 50-day bounce in this method. It is a bit extended above the 50-day but the closeness to the 10-week moving average allows one to gauge the stop loss off of that average. Today's volume exceeded any down-day volume in the prior 10 trading days. This alert looked easy to enter and may remain actionable tomorrow.

EMES looks to be bouncing off of the 10-day moving average with today's volume exceeding any down-day volume in the prior 10 trading days. This opportunity also looked easy to enter and may remain actionable tomorrow.

AKRX is trading close to the 10-day moving average with appropriate volume surge but at least for my style of trading may be a bit extended being 4.5% above the 10-day. It could pull back tomorrow and allow a buy nearer the average.

THRM is like AKRX, extended 4.7% above the 10-day and would likely be a pass at least for today.

EOG would have produced a volume surge buy alert in the early afternoon but at the close it was 0.2% below the 10-day. This could have been watched to see if the price was going to surge. If this opportunity were acted upon this would be monitored for the possibility that the 10-day provides resistance and cut the loss about 2% below the average.

CBG would have produced a volume surge buy alert and is still within 2% of the 10-day, thus actionable tomorrow.

Six alerts with three easily actionable is the results of today's volume alert trading. These opportunities should be entered as close to the 50-day or 10-day moving average as possible with that line (with some porosity) representing the stop loss line going forward. This represents something like a 2-4% risk depending on how close to the stop line the buy was executed.

The idea behind the preselected list of stocks with good fundamentals is to provide an early entry opportunity into a stock that may not have set up yet with a classic pivot point with a breakout and with the good fundamentals offer the probability that the stock can rise over a medium to long time frame. I provide an example of a prior volume alert trigger opportunity in the following chart of EOG. In this case a stock with good fundamentals regains the 50-day moving average during a pull back in the stock. The 50-day moving average has turned flat giving us some confidence that the stop loss line will not be moving away from us. EOG never looked back. This buy point was 6.7% prior to the classic buy point opportunity at 94.15. Something else is noticeable about this opportunity that makes if even lower risk. The three moving averages (10-day, 21-day 50-day) have all converged at the buy point. Each moving average is a possible support line. These are very desirable set ups.

[Chern]

Looks very interesting. Is this something being posted or should we be doing our own scans? Thank you, I always find your posts very thought provoking and useful.

[Riskslayer]

Hi Mike,

Looks like a great approach to me.

After you developed your confidence in these alternative entry strategies (volume moves off 50d and 10d) - what % of your entries are you using for these new strategies vs the classic chart patterns (cup w/ handle, etc)?

Are more than 50% of your entries now with the alternative entry strategies vs classic?

Thanks,

Shawn

[Mike]

Looks very interesting. Is this something being posted or should we be doing our own scans? Thank you, I always find your posts very thought provoking and useful.

I do my own scans using tools I developed in eSignal. What we are trying to bring to the EV site is these same tools operating in real time.

[Mike]

Hi Mike,

Looks like a great approach to me.

After you developed your confidence in these alternative entry strategies (volume moves off 50d and 10d) - what % of your entries are you using for these new strategies vs the classic chart patterns (cup w/ handle, etc)?

Are more than 50% of your entries now with the alternative entry strategies vs classic?

Thanks,

Shawn

Shawn I use the 50-day entry method (such as the EOG example) more often than the 10-day moving average entry. I prefer these entries over classic breakout entries which have become perhaps too obvious. I don't have a tally of how much of my portfolio is usually filled with alternate entries vs. classic but more than 50% seems right. I pay strict attention to executing these alternate entries at a price very close to the moving average and don't chase. I would rather wait for another opportunity than chase. The initial setting for volume alert triggers will be 0-5% above the moving average, 5% is wider than I will normally execute a trade but it places it on my radar screen to wait for developments in the case it is extended. Not all volume trigger alerts should be bought, instead they should be inspected to determine if the opportunity warrants an entry. What I want to see in a "perfect" 50-day setup is the following (not every opportunity will meet all criteria):

1. A stock that I want to own setting up in a constructive basing pattern.
2. Price bouncing off of or coming up through the 50-day moving average.
3. Really obvious volume, not just minimum.
3. 50-day moving average rising.
4. Execution price within 2% of the 50-day moving average.
5. Confluence of multiple moving averages just below price.

A perfect 10-day moving average entry will have many of the traits above and show an orderly pull back to the 10-day with light volume followed by a large volume move up. The characteristics of the pull back might well resemble the shape of a sound handle of a cup with handle pattern. Some stocks are bought in the handle area using this method.

[barbados11]

Shawn I use the 50-day entry method (such as the EOG example) more often than the 10-day moving average entry. I prefer these entries over classic breakout entries which have become perhaps too obvious. I don't have a tally of how much of my portfolio is usually filled with alternate entries vs. classic but more than 50% seems right. I pay strict attention to executing these alternate entries at a price very close to the moving average and don't chase. I would rather wait for another opportunity than chase. The initial setting for volume alert triggers will be 0-5% above the moving average, 5% is wider than I will normally execute a trade but it places it on my radar screen to wait for developments in the case it is extended. Not all volume trigger alerts should be bought, instead they should be inspected to determine if the opportunity warrants an entry. What I want to see in a "perfect" 50-day setup is the following (not every opportunity will meet all criteria):

1. A stock that I want to own setting up in a constructive basing pattern.
2. Price bouncing off of or coming up through the 50-day moving average.
3. Really obvious volume, not just minimum.
3. 50-day moving average rising.
4. Execution price within 2% of the 50-day moving average.
5. Confluence of multiple moving averages just below price.

A perfect 10-day moving average entry will have many of the traits above and show an orderly pull back to the 10-day with light volume followed by a large volume move up. The characteristics of the pull back might well resemble the shape of a sound handle of a cup with handle pattern. Some stocks are bought in the handle area using this method.

Mike,

I look forward to seeing this system in action. Count me in.

Thanks,

Pablo

[jmbarnette]

Thanks Mike, I've been watching for these types of setups as well. V gives a similar pattern, but the volume didn't come in until yesterday:



Similar pattern in LVS, a lot of distribution lately it seems, but the setup is there. Also open to a breakdown here giving a nice H&S pattern. Either way, playable.

[jmbarnette]

Two nice moving average confluence setups with TSLA. Retesting the second now it seems.

[barbados11]

Shawn I use the 50-day entry method (such as the EOG example) more often than the 10-day moving average entry. I prefer these entries over classic breakout entries which have become perhaps too obvious. I don't have a tally of how much of my portfolio is usually filled with alternate entries vs. classic but more than 50% seems right. I pay strict attention to executing these alternate entries at a price very close to the moving average and don't chase. I would rather wait for another opportunity than chase. The initial setting for volume alert triggers will be 0-5% above the moving average, 5% is wider than I will normally execute a trade but it places it on my radar screen to wait for developments in the case it is extended. Not all volume trigger alerts should be bought, instead they should be inspected to determine if the opportunity warrants an entry. What I want to see in a "perfect" 50-day setup is the following (not every opportunity will meet all criteria):

1. A stock that I want to own setting up in a constructive basing pattern.
2. Price bouncing off of or coming up through the 50-day moving average.
3. Really obvious volume, not just minimum.
3. 50-day moving average rising.
4. Execution price within 2% of the 50-day moving average.
5. Confluence of multiple moving averages just below price.

A perfect 10-day moving average entry will have many of the traits above and show an orderly pull back to the 10-day with light volume followed by a large volume move up. The characteristics of the pull back might well resemble the shape of a sound handle of a cup with handle pattern. Some stocks are bought in the handle area using this method.

Mike,

Would it not make sense to set the alert from a little under the moving average say -2- +5% to see stocks that have escaped the screen but are poised to come up through the moving average? I'm sure you have it figured out but just thinking.

Thanks,

Pablo

[Mike]

Pablo,
You bring up an important issue. In my own setup I alert on a small percentage below the moving averages.
This is something we can jointly pursue. The trade off is too many alerts vs missing something important.
Once we are up and running we can explore options.