6-7-2015 Comments

[barbados11]

Mike, thanks for this update. One question I have is at what level of Quality% do you feel comfortable enough to pull the trigger? I know the higher the better but what's the minimum?

Best regards,

Pablo

[Mike]

Mike, thanks for this update. One question I have is at what level of Quality% do you feel comfortable enough to pull the trigger? I know the higher the better but what's the minimum?

Best regards,

Pablo

Pablo,

Quality was created to prevent too many marginal set ups from triggering an email alert. I can't remember whether we set the quality threshold for an email alert to 60 or 70 but one of those numbers. Quality is equal to the volume percent margin (excess end of day projected volume above minimum) divided by the estimate of percent of end of day volume already traded. So if the volume margin is 30% above threshold volume and half of the day's trading is completed we get a 30/(0.5) = 60 quality.

I use the EV Volume Trigger Alert page to highlight the potential alerts (row becomes highlighted in green) and then I do my own due diligence from there. If I really want a particular stock I don't wait for the Quality number. The stocks have all been vetted through my weekend stock selection routine thus my due diligence essentially goes to answering one single question: If I buy the stock can I suffer through a pullback without getting stopped out? If I am buying a 50-day MA trigger I want to be able to sit through a pullback to the 50 day, so it comes down to how far extended is the price above the 50-day. Similar thinking with a 10-day alert. In today's market I am comfortable buying more 50-day set ups than 10-day set ups.

[barbados11]

Mike,

Thanks for your detailed, thoughtful and candid answer. Buying off the 50 makes a lot more sense as you explained, especially in the current QE environment.

Best,

Pablo