Skip to main content

Updated Swing Signal approach yields three Strong BUYs

I wanted to call readers attention to a new feature that I added to the Alert HQ Swing Signals yesterday afternoon.

As you may know, the TradeRadar Swing Trading Signals are generated by identifying those stocks or ETFs that have exceeded their upper or lower Bollinger Band and then reverse back in within the Bollinger Band envelope. We also use Williams %R to help avoid whipsaw.

What we instituted yesterday afternoon was a simple trend detection method. For example, if our usual analysis generates a BUY signal, we now check to see if the 50-day exponential moving average is at least 1% higher than it was a week ago. If it is, we assume the trend is up-ward and we designate this signal a "Strong BUY"; otherwise, it will be listed as regular "BUY".

Similarly, in the case of SELL signals, we look for a down trend and if we have one we designate the signal a "Strong SELL".

Using this new approach, we expect to be able to separate Strong BUYs from the situation where we are getting a dead cat bounce that may possibly fail at the 20-DMA. For example, a stock can be doing well. Then it announces a bad earnings report and provides poor forward guidance. The stock gets killed, falls below its 50-DMA and the lower Bollinger Band sinks downward. If the stock is suffering a serious decline, the 50-DMA will begin to roll over. Then the stock begins a move back up from a multi-month low. We will still show it as a simple swing trading BUY but it should be interpreted as a more speculative BUY.

In the case of stocks in a downward channel that are beginning to turn up, we will continue to designate these stocks as simple BUYs also. They may move back up to the top of their channel, providing a good swing trading opportunity, but we would have less confidence in the extent of the move.

Our first three Strong BUYS --

This weekend no Strong SELLs were detected but we have three stocks that qualified as Strong BUYs. Here they are:
  • Arc Sight (ARST)
  • The Dress Barn, Inc. (DBTN)
  • Kirkland's Inc. (KIRK)
All are in up-trends, all are small-caps, all are free cash flow positive and all have little or no debt. Of the three, The Dress Barn and Kirkland's seem more attractive as they have modest PEs, trade at low Price to Sales ratios and have PEG and Price to Book ratios that are not excessive.

So keep an eye out for our Strong BUY and Strong SELL signals at the Alert HQ Swing Signals page. Just click the "Signal" table heading and they will pop to the top of the list.
Labels:

Comments

Post a Comment

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation
4 comments
Read more

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position. This first post in the series starts at the beginning: getting good investment ideas. Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets. As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professional
20 comments
Read more

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas. Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what
11 comments
Read more