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New Swing Trading Signals for March 27, 2009

Last week we introduced our first list of TradeRadar Swing Trading Signals and this week 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. Here is our updated methodology:
  • For a SELL signal we now 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.)
  • 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.

This week's results --

This week we have a total of 317 stocks and ETFs on our list of Swing Signals. Refining our selection criteria has reduced the total number of signals generated and hopefully eliminated the majority of false signals that might lead to whipsaws.

Similar to last week, stock price gains in the first part of the week were followed by a decline. Once again as we crunch the week's data, the SELL signals outnumber the BUY signals.

Here is the final breakdown: 251 SELL signals and 66 BUY signals.

Last week I asked whether it might be time to put on a few short positions. Well, last week was certainly too early as major indexes added over 6%. With our refined algorithm and the market seemingly getting ahead of itself, this week's emphasis on SELL signals may be a bit more accurate. We shall see...

Get the free data --

To see this week's list you can check out the TradeRadar Swing Signals page. All 317 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.

Future Improvements --

I am planning to eliminate any stocks trading for less than $1.50 in next week's list. At these levels, a few pennies can translate into enough volatility to generate false signals. If you have any objections or suggestions, please leave a comment.
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