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Locating Strong Stocks

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Post Options Post Options   Quote maximo Quote  Post ReplyReply Direct Link To This Post Topic: Locating Strong Stocks
    Posted: 11 May 2009 at 5:53pm
G'day Bana,
 
Thanks for posting those excellent analysis techniques to go with RSC.
I add a liquidity filter too when scanning outside the ASX300, great work!
The market is giving us so many good opportunities at the moment.
 
Cheers
Max
 


Edited by maximo - 12 May 2009 at 3:30pm
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Post Options Post Options   Quote Bana Quote  Post ReplyReply Direct Link To This Post Posted: 10 May 2009 at 11:55pm
Added a volume criteria to the scan, to filter out the small illiquid stocks - 50 day EMA > 750,000. This reduced the scan results from 138 to 54.

Flags seems to be in season. A couple which did not make it to the 30's shortlist, but look noteworthy:



Edited by Bana - 11 May 2009 at 12:14am
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Post Options Post Options   Quote Bana Quote  Post ReplyReply Direct Link To This Post Posted: 10 May 2009 at 11:42pm
All results of above scan

Symbol     RSCN     RSC - RSI     RSC - ROC
AAH     1.702     4.634     69.969
ABB     1.307     3.038     25.297
AGG     0.023     3.257     59.527
AGK     1.219     3.224     63.099
AGO     4.818     2.697     9.36
AGP     5.296     8.752     17.485
AGS     2.58     2.158     13.281
AND     3.794     4.254     7.309
ANZ     0.273     0.603     4.215
AOE     14.186     5.519     82.486
APA     0.127     1.143     18.635
ARP     1.436     1.956     7.173
ARU     2.424     2.61     15.511
ASX     1.016     2.066     10.445
ATR     5.476     0.554     14.832
AUB     1.069     2.949     27.995
AWE     3.482     2.371     11.23
AXA     0.459     1.15     4.777
BBG     1.757     1.309     10.847
BHP     2.322     2.803     18.472
BKL     1.115     1.342     5.638
BKW     1.172     2.046     40.935
BLD     0.583     0.494     2.604
BOC     2.157     1.994     22.673
BUL     1.82     4.522     61.76
BWP     0.487     1.656     18.291
CBA     0.293     1.255     16.466
CCL     0.751     2.872     22.503
CDP     0.552     0.954     9.958
CDU     1.459     2.286     3.225
CFE     1.929     4.204     62.516
CFX     0.091     0.171     0.486
CGG     0.004     2.895     5.856
CGX     2.428     4.059     18.14
CIX     1.462     1.585     16.165
CMW     9.345     0.855     1.26
CNA     3.812     2.604     15.25
CNX     1.582     4.624     181.413
COF     3.996     1.01     10.288
COH     0.711     1.301     19.447
CSL     2.598     2.265     15.698
CST     8.305     3.568     49.26
CTX     2.764     0.41     0.882
CTY     0.356     8.281     23.626
CUS     0.076     5.05     245.437
CUV     1.923     1.615     26.319
CVN     2.18     5.444     50.139
CZA     0.47     4.928     8.754
DJS     1.374     2.91     21.359
DMP     0.346     2.235     21.965
DOM     8.72     5.031     37.215
DOW     0.981     1.644     11.283
DTL     0.713     2.623     14.93
DYE     4.286     2.702     5.451
ERA     7.826     3.524     33.117
ESG     3.075     5.282     151.178
FAN     2.269     1.918     5.546
FLX     1.089     3.644     39.699
FRI     1.429     3.484     21.568
FWD     3.605     2.685     16.365
GBG     2.632     2.694     27.485
GCL     5.206     2.414     4.26
GOW     0.258     1.885     17.324
GWT     0.028     1.407     13.165
HSP     8.305     0.384     1.687
IMF     5.332     10.81     223.903
IRE     1.427     3.167     27.613
IVC     1.227     1.82     5.189
JBH     3.714     4.056     49.674
KAR     33.623     8.057     178.698
KCN     5.239     4.051     77.086
LEP     0.83     0.667     12.713
LNC     15.226     3.73     230.879
LNG     2.139     2.657     36.952
LNN     2.252     6.544     51.25
LWB     0.504     2.936     29.931
MIN     3.127     2.924     2.593
MML     4.286     5.618     50.742
MND     9.133     2.887     16.318
MPO     0.23     3.021     58.89
MRM     1.477     3.657     31.26
MRU     14.629     7.956     86.26
MSB     0.027     0.829     25.71
MTS     7.992     1.914     25.663
NCM     6.743     2.94     8.387
NEM     0.062     2.525     29.8
NHC     4.538     5.453     96.266
NHF     0.146     1.594     7.145
NMS     3.07     2.971     17.632
NUF     2.22     3.162     16.69
NVT     0.047     3.558     54.523
NZO     5.48     3.756     36.38
OMH     7.533     3.463     42.111
ORG     8.407     5.978     119.496
ORI     1.512     1.657     1.747
ORL     0.983     3.348     27.507
OSH     1.727     3.69     57.831
PDN     23.664     2.301     2.38
PPP     0.844     5.162     67.661
PRC     0.597     3.502     18.585
PRU     3.926     2.944     8.184
PVE     0.509     2.836     23.78
PWK     7.396     3.416     15.307
PXS     3.735     3.584     29.26
QBE     1.565     1.535     27.532
REA     5.918     2.908     18.98
REH     3.334     1.781     8.098
RFG     1.181     3.902     25.579
RHC     7.626     1.781     13.848
RIC     0.268     0.618     2.067
RIV     70.968     3.466     16.403
RMD     0.519     2.873     54.318
SAI     0.284     1.847     23.806
SGH     0.847     4.495     37.368
SGT     0.208     2.131     16.589
SGX     2.818     2.517     1.347
SHL     0.568     0.701     10.236
SLM     0.577     3.048     39.848
SLX     0.953     3.37     25.896
SOL     1.222     2.96     54.684
SOT     0.06     1.073     30.165
SRX     0.365     3.511     15.012
SST     4.035     14.133     54.26
STO     2.485     3.53     61.741
SUL     0.272     3.317     26.319
TAL     0.421     1.876     25.479
TFC     3.842     3.841     35.728
TGR     1.603     1.505     1.955
TOL     3.87     1.479     3.135
TRS     3.756     2.948     21.138
UGL     4.55     1.089     10.023
UMC     5.178     3.048     32.658
WBC     0.599     1.878     17.596
WEB     0.989     3.437     29.705
WOW     3.187     2.35     19.498
WPL     2.484     2.4     6.278
WSA     21.175     2.679     17.427
WTF     0.629     3.309     26.034

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Post Options Post Options   Quote Bana Quote  Post ReplyReply Direct Link To This Post Posted: 10 May 2009 at 11:30pm
Hello Maximo

Thanks again for the help above. I think I owe you the results. This is what I have done -

Using your above scans, I created a combined scan of:
RSCN>0
RSC-ROC>0
RSC-RSI>0
Search - All Ords

{I had some discrepancies with RSCN scan results a few months ago and Bullcharts support told me to change "Number of bars to load", under "Advanced tab", from automatically to a high number e.g. 10,000. This solved the problem. So I did the same setting for this scan}

This gave me over 140 results. Since I am after the strongest stocks, I looked at only the top 10 stocks of each attribute i.e 30 stocks in total.

Now I am now looking for any pattern which might let me ride on one or more of these 30 stocks. I am looking for trend continuations or breakouts.   

Below is the shortlist from the 30 stocks -

Starting with RSC -
KAR (Flag), LNC (Flag), MRU (steep but stable trend, compatible with trendline and CBL, CMW (BO from consolidation), MND (steep but stable trend)

RSI = KAR (as above), MRU (as above), ORG (trend/channel)

ROC = KAR, CUS (breakout), LNC, MRU, ESG (breakout), ORG


Common in all categories - KAR, MRU
Common in at least 2 categories - LNC, ORG






Edited by Bana - 11 May 2009 at 12:13am
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Post Options Post Options   Quote Bana Quote  Post ReplyReply Direct Link To This Post Posted: 10 May 2009 at 9:46pm
Hello Maximo

Thanks for the response and formulas. Works like a treat. Going to play with it now.

Cheers
Bana

Edited by Bana - 10 May 2009 at 10:07pm
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Post Options Post Options   Quote maximo Quote  Post ReplyReply Direct Link To This Post Posted: 10 May 2009 at 2:16pm

Here's Leon Wilsons internal strength indicator converted.  It looks to be an 11 period RSI formula (really 21ema) with 3 period smoothing.    I changed it to a subtraction result as this is more useful, like hedge fund analysis.  ie. Long a number of strong stocks, Short a number of weak stocks.   The scan is set up the same way as above.

{ RSC - internal }
 
[Description="Leon Wilson's - Next Step to Share Trading, chapter 6."]

period:= input("Period",21,1);

smooth:= input("Smoothing",3,1);

symb := inputsymbol("Compare to", "XJO");

ind:=LoadSymbol(symb,C);

{ COLUMN A: Stock }

Up:=if(close>ref(close,-1),close-ref(close,-1),0);

Down:=if(ref(close,-1)>close,ref(close,-1)-close,0);

VALUE1:=100-(100/(1+(sum(up,period)/(sum(down+0.0000001,period)))));

Stock:=Ma(value1,smooth,E);

{ COLUMN B: Index }

iUp:=if(ind>ref(ind,-1),ind-ref(ind,-1),0);

iDown:=if(ref(ind,-1)>ind,ref(ind,-1)-ind,0);

VALUE2:=100-(100/(1+(sum(iup,period)/(sum(idown+0.0000001,period)))));

Index:=Ma(value2,smooth,E);

Stock - Index;

 



Edited by maximo - 10 May 2009 at 3:08pm
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Post Options Post Options   Quote maximo Quote  Post ReplyReply Direct Link To This Post Posted: 09 May 2009 at 10:12pm

From the resulting scan of the RSI comparison I did a screen capture of the strongest and weakest stock in the list from the ASX300.   Made another indicator to show all 3 RSI lines.   Red=Index, Green=Stock, Blue=difference or strength.   You can now see what is going on when they are subtracted.   The strongest stock is doing better than the index by 14% while the weakest is below -23%.   The red/green lines show the strongest one has been stronger than the index for about 2 weeks while the weakest one has been weaker for about 2 months. 

 

{ RSC - RSI plot 3 }

period:= input("Period",28,1);

symb := inputsymbol("Compare to", "XJO");

index:=LoadSymbol(symb,C);

[color=red]

indexRSI:= RSI(index,period);

indexRSI;

[color=lime green]

stockRSI:= RSI(C,period);

stockRSI;

[color=blue]

RSIrsc:= stockRSI - indexRSI;

RSIrsc

 

 



Edited by maximo - 10 May 2009 at 2:54pm
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Post Options Post Options   Quote maximo Quote  Post ReplyReply Direct Link To This Post Posted: 09 May 2009 at 6:54pm
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Post Options Post Options   Quote maximo Quote  Post ReplyReply Direct Link To This Post Posted: 09 May 2009 at 6:46pm
You have great ideas even if they are a random pick off the bookshelf :P   An easy and effective trading system approach is to do a strength comparison scan of stocks versus the index.   To compare stocks to an index you load the index symbol and apply the same indicator to both the stock and the index then you subtract them to find the difference or strength.    Note:  The RSI indicator formula doubles the value parameter it is given and subtracts 1.  so the default value 28 is actually using a 55ema.
 
 Indicator 1:
 
{ RSC - ROC }

period:= input("Period",300,1);

symb := inputsymbol("Compare to", "XJO");

index:=LoadSymbol(symb,C);

ROCrsc:=ROC(C,period,%) - ROC(index,period,%);

ROCrsc;

 
Indicator 2:
 
{ RSC - RSI }
 

period:= input("Period",28,1);

symb := inputsymbol("Compare to", "XJO");

index:=LoadSymbol(symb,C);

RSIrsc:=RSI(C,period) - RSI(index,period);

RSIrsc

 



Edited by maximo - 09 May 2009 at 9:58pm
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Post Options Post Options   Quote Bana Quote  Post ReplyReply Direct Link To This Post Posted: 08 May 2009 at 2:46pm
Once in a while I randomly pick a book from my bookshelf and read a random chapter to refresh my memory. It so happened that I recently picked up Leon Wilson's - Next Step to Share Trading, chapter 6.

He talks about identifying strong stocks. He goes into much details about customised indicators to study such stocks (which frankly...for me was bit confusing). But overall I liked the 'message' of chapter which I interpreted as -

find stocks which have been outperforming the index (RSC), have greater internal strength than index (RSI) and have greater rate of change than the index (ROC).

in bullcharts, the first scan for RSC is straight forward. But how do we scan for RSI and ROC of a stock as compared to an index (e.g. XJO)?

In the book, he has following search criterias tailored for Metastock:

Internal strength comparison search
< ="-" ="text/; =utf-8">< name="ProgId" ="Word.">< name="Generator" ="Microsoft Word 11">< name="Originator" ="Microsoft Word 11">


COLUMN A

Up:=if(close>ref(close,-1),close-ref(close,-1),0);

Down:=if(ref(close,-1)>close,ref(close,-1)-close,0);

VALUE:=100-(100/(1+(sum(up,21)/(sum(down+0.0000001,21)))));

Mov(value,3,E);


We use the "Indicator" reference in Metastock exploration feature to refrence the required index for the search comparison. This can be checked by refereing to the default RSC indicator

 

COLUMN B

Up:=if(INDICATOR>ref(INDICATOR,-1),INDICATOR-ref(INDICATOR,-1),0);

Down:=if(ref(INDICATOR,-1)>INDICATOR,ref(INDICATOR,-1)-INDICATOR,0);

VALUE:=100-(100/(1+(sum(up,21)/(sum(down+0.0000001,21)))));

Mov(value,3,E);


Filter

colA>colB



Momentum Comparison

Column A
Close

Column B
(((Close-ref(close,-21))/ref(close,-21))*100)-(((Indicator-ref(indicator,-21))/ref(indicator,-21))*100)

Filter
(((Close-ref(close,-21))/ref(close,-21))*100)-(((Indicator-ref(indicator,-21))/ref(indicator,-21))*100)>=0

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