Alert HQ for the week ending 2-22-2008

The latest lists of stock alerts are up and available at Alert HQ.

It was a messy week on Wall Street and the result can be seen in this week's alerts. A mere eleven BUY signals and only one SELL signal.

On the buy side, it is hard to say there is a trend but we do see a couple of energy-related companies, a couple of tech companies and a uranium company.

Interestingly, this week's lone sell signal continues last week's trend: it's a bond fund.


Enhanced alert process rolled out this week

The TradeRadar signal process is all about trend reversal. To enhance our alert accuracy, I have added several new tests, the results of which are also recorded for each stock in the alert file. Before I get into them, I would like to review the current data that is provided in the alert list.

As can be expected, I provide the stock symbol, name, the exchange on which it trades, the last price and the signal strength of the TradeRadar signal. I have also been indicating whether a stock's 20-day moving average has crossed its 50-day moving average. This last is not a requirement to be included on the list but it does give confirmation that a move is strong if the cross-over has been detected.

With this week's list, I am adding two new indicators: DMI and Aroon. Both are useful for determining trend direction and trend strength.

DMI, also know as the Directional Movement Indicator, is used to evaluate the strength of a current trend. There are three components to the system. The average directional movement index, or ADX, determines the market trend. When used with the other two components of the system, the up and down directional indicator values, +DI and -DI, the DMI can be used to confirm the TradeRadar signals.

We don't reject a stock if the DMI is unclear or going in the wrong direction but we provide our DMI reading in the alert list so you will have one more data point to consider.

Aroon is an indicator system that can be used to determine whether a stock is trending or not and how strong the trend is. When Aroon(up) dips below 50, it indicates that the current trend has lost its upward momentum. Similarly, when Aroon(down) dips below 50, the current downtrend has lost its momentum. Values above 70 indicate a strong trend in the same direction as the Aroon (up or down) is under way.

Aroon is now used as a test criteria when generating our list of alerts. This means if a stock generates a TradeRadar signal but fails the Aroon test, it will not be included in the alert list. We do provide the Aroon readings that we got for each stock that does make our list.

My expectation is that these enhancements will make the TradeRadar alert lists that much more reliable.