How to build a watchlist of strong stocks

TechniTrader® 1 B104 Weekly Stock Review 091914

How to Build a Watchlist of Strong Stocks with a Scan Last week we talked about the value of Scans for choosing stocks to invest in that are right for YOU and YOUR goals, not some guru or recommendation service. We also created a simple scan in Freestockcharts.com. Scans are a great way to evaluate the overall market conditions, how to trade, where the institutions are buying or selling and how most stocks are moving within their trends.

At TechniTrader we create many different scans to help our students both analyze the market conditions to understand which market participants are dominating the bulk of the trading activity, which informs how stock price action is most likely to behave, and also scans to help students specialize and customize their trading to give them an edge in the stock market, rather than follow the crowd.

By using the correct Scans, you can do a couple of very important things:  

You can actually “see” into the market.

You can choose strong stocks for a watchlist to buy or sell when the chart patterns set up for an entry.

Today our simple scan from last week pulled up only 4 stocks, an interesting piece of information for what is going on in the market right now, since last week it brought up 14 stocks.

TechniTrader® 2 B104 Weekly Stock Review 091914 Only 4 stocks in a scan that started with a list of 400 tells us that very few stocks in the 5 to 25 dollar range have moved with volume above their average volume over the last 30 days.

Meanwhile, on this particular day, the Dow had a breakout move above prior highs.

Understanding which market participants trade the largest big name-brand stocks of the Dow actively and who trades lower-priced stocks actively for long term growth potential gives insight into the undercurrents of the Velocity market occurring on the Dow 30 index. This is part of what we at TechniTrader call Relational Analysis™.

For our scan today, we’re going to use the “Sort” tool, which is another great tool that you can use in charting programs. We’ll use the sorting column “% Change” for this example. This puts the stocks in the scan in order from highest to lowest percentage change for the day so you can start studying the charts from the top of the list with the biggest gainers.

Now that we have screened down 400 stocks to just 4 stocks, and have sorted the list by percentage change, it is time to study the charts to see if there is anything of interest to study for a potential stock pick.

TechniTrader® 3 B104 Weekly Stock Review 091914 Exelis Inc. (NYSE: XLS) is moving up out of one of the newer bottom formations called a “Basing Bottom.”

We can also see that the stock price is moving in a swing style trendline pattern right now and that a fast-moving run has been underway for 15 days. Another important detail to notice is that the green Volume Bars are getting smaller as the run continues up. These details help you consider whether you should put the stock on a watchlist to wait for the inevitable end of the run or if you’ll try to get what may be less than a dollar more in the run from a late swing style entry. These are just a few of the vital pieces of information that tell you whether the stock is suited to your approach to trading. Today, we’ll put this stock on a watchlist to see what happens as it reaches some resistance in the price history just overhead.

So now we need to create a “Watchlist” so we can save the stock to come back to later. In Freestockcharts.com, click the “Add Portfolio” link at the top of the chart next to the company name to add the stock to an existing watchlist or create a new personal watchlist.

TechniTrader® 4 B104 Weekly Stock Review 091914 These are just a few examples of techniques to use for a better, more personalized way of choosing stocks to trade or invest in than just acting on the advice of others, who may not have the same goals as you. At all times, investors and traders must be at the helm of decisions made for making income or building wealth from trading in the stock market. Smart investors learn techniques that improve their chances for good investment returns.

If you are a beginner, watch the video for beginner investors and traders at TechniTrader.com. If you are a more advanced trader with some trading experience, then watch the advanced video. Both are accessible from the buttons on our home page at Technitrader.com.

Trade wisely, Martha Stokes CMT Member of the Market Technicians Association Master Rated Technical Analyst: Decisions Unlimited, Inc. Instructor and Developer of TechniTrader® Stock Market Courses © 2014 Decisions Unlimited, Inc. dba TechniTrader®. All rights reserved.

Disclaimer: All statements, whether expressed verbally or in writing, are the opinions of TechniTrader®, its instructors and/or employees, and are not to be construed as anything more than an opinion. There is risk in trading financial assets and derivatives. Due diligence must be done before trading any issue.

Students/ subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor. It is strictly an educational service.