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Sunday, April 5, 2009

New Swing Trading Signals for April 3, 2009

This is the third week of our offering the free list of TradeRadar Swing Trading Signals. Once again we've done some work to refine how those signals are generated.

Our TradeRadar Swing Signals are based on Bollinger Band breakouts combined with a reversal. A description of our updated (for the second time) methodology follows. First the basics:
  • For a SELL signal we look for price to climb 2% above the upper band, then fall below the upper band within a time frame comprising 10 days. We look for the price to fall into a range between 0.25 Standard Deviation and 1.5 Standard Deviations below the upper band but still above the 20-day moving average before designating it a SELL signal. (Remember that Bollinger Bands are typically defined as the levels two standard deviations above and below the 20-day moving average.) Our view is that if the stock has already fallen below the 20-DMA then most of the move has already taken place and it is too late for a trade.
  • For a BUY signal we look for the opposite setup: price falls 2% below the lower band and recovers upward into a range 0.25 Standard Deviation and 1.5 Standard Deviations above the lower band.
Here are the two new aspects of the process:
  • We now limit our swing trading signals to those stocks trading at $1.50 or greater. We are trying to avoid those situations where a change in price of a few cents generates overly large percentage moves and very sloppy charts.
  • When looking for a BUY signal, we require that the most recent day's closing price be higher than the previous day's closing price. Similarly, we require for a SELL signal that the last day's closing price be lower than the previous day's closing price.
This week's results --

The effects of the changes in our signal generation processes are quite apparent. Last week we had a total of 317 stocks and ETFs on our list of Swing Signals. We have only 57 this week. This further refining of our selection criteria has again reduced the total number of signals generated and hopefully made the system more reliable.

Once again as we crunch the week's data, the SELL signals outnumber the BUY signals. I am surprised to see this outcome when major stock averages are surging upward. I guess a rising tide doesn't quite carry all boats.

Here is the final breakdown: 40 SELL signals and 17 BUY signals.

Get the free data --

To see this week's list you can check out the TradeRadar Swing Signals page. All 57 stocks are listed, plus we provide a free download in the form of a CSV text file which can be easily opened in Excel or any text editor. In addition to the signal and the stock symbol, we also provide some basic fundamental data to help you select the stocks that are of most interest to you.

If you have suggestions or questions, please leave a comment!

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