Sunday, May 03, 2009

These Stocks Trade Straight Up from the Open

Big HT (Hat Tip) to SMB Capital.

Our friends over at SMB Capital write an incredibly informative blog about the art of trading, the training regiment required for success, and what tools (both in your head and at your fingertips) are need to be successful consistently.

Below is the pattern they described in the article they wrote on Thursday, April 30th describing VISA (V):
"I was aggressive right on the Open with V today because…..
  1. it was very strong into the Close yesterday.  It never traded below 61.80 after the Fed and held nicely near 63.50 into the Close.
  2. The first ticks were up above 64.
  3. The first tested bid held.
  4. The next resistance was not for miles, 67.
  5. V has a history of being explosive.
  6. V is a Tier 1 stock that Hedge Funds and Institutions buy.  Think best of breed.
  7. The SPY’s are above 87.
  8. Strong stocks have made strong moves after solid earnings.
  9. The bids kept stepping up and holding.  This is the key.  When I see this I think “game on.”  Now I am aggressive.
  10. The bids never dropped from 64 to most of 67.50.
I do not care where V closes.  This is a momentum trade to be made on the Open.  Later, the market rolled over so V plummeted.  I care about a pattern that I see time after time which most developing traders miss.  This is easy money."

Based on the article I developed this strategy that caught 'V' and several others just like it on Thursday as well as Friday and will ongoingly.  

The strategy contains 2 alerts and 11 filters:

  
 New high (filtered) Running up; Filter=2 (1.0 shows the most alerts, 10.0 shows only the fastest moving stocks.) Min Price=5 (Dollars) Max Distance from Inside Market=.15 (%) Min Daily Volume=1,000,000 (Shares / Day) Min Current Volume=1 (Ratio) Min Volume Yesterday=95 (%) Min Position of Open=99 (%) Min Up Days=1 (Days) Min S&P Up 5=.05 (%) Min Up from the Close=1 (Bars) Min Position in Previous Day's Range=99 (%) Min Market Cap=1,000 ($1,000,000)

Note: If you want to add more conservative risk to this strategy, one suggestion would be to increase the market directional filters in Trade-Ideas PRO and choose, for example, the S&P 5 Min Up filter with a higher setting than 0.05% or make choose additional markets that must also be up.  This will only show you opportunities when the S&P or another market you choose is even  more positive.



Related Articles

This is my favorite type of post: we find an article from someone reputable and model the pattern they've shared in the article inside Trade-Ideas PRO.  We not only find the stock that they mention in the article, but many others in the same pattern.

I need to do more of these - on top of all the ones we tag with the words, "Strategy-Session".

3 comments:

Dialysis said...

Hello...great article and thanks for showing the alerts and filters. Would u be able to help with what alerts and filters to use to find gap up or down stocks?

D TradeIdeas said...

Thanks for the feedback. Take a look at the previous articles we've written dealing with gaps: Gap Strategies

I used the search feature on the blog. Good luck!

Dialysis said...

Thank you d. Appreciate it. In terms of the filters for the "stocks that trade like V". Can u give me some examples of what values II should enter in these filters since I'm not getting many alerts on them. Backtesting it I'm only getting one and sometimes none over 10 days. I tried reading the material but I'm sure I'm doing something wrong. If u can give me the values at work best I would greatly appreciate it.