- Moving Averages [outside link]
- Price Movement / Support & Resistance
- Stochastics [outside link]
- Moving Average Convergence Divergence (MACD) [outside link]
- Volume & Average Volume
- Trends and Position within Trends
- Patterns
- Multi-Indicator Setups
Fundamental Analysis:
- Low Debt to Equity
- High Earnings Per Share (and high within EPS rank)
- Sustainable dividends is often an indicator of a healthy stock, but value of dividends should not have any impact on whether or not a trade is made. Dividends are minute in the scheme of things and mean almost nothing within the context of short->medium term trading.
- Significant Free Cash Flow
- Avoid stocks under $10 (but not religiously)
- Look for stocks with relatively low shares outstanding. Supply/Demand dictates that much more money is required to move price of stocks with higher shares outstanding.
- < 30 million*
- Institutional Ownership can be a boon or a bane.
- Stick to stocks at levels of 1-20%*
- Buying at new highs (upon breakout of a trend) avoids falling prey to a situation in which many buyers who got in toward the top of the last upswing, in a channel for example, and waited with a loss for some time for the price to return again, create resistance at the old highs thru mass selling.
- Avoid stocks with high P/E relative to broader market - strong earnings trend very important*
- In a bear market, play the stocks for which the fundamentals have not been impaired.
- News can move a stock in unpredictable ways.
- No stock is immune, but it could be valuable to consider which stocks are most prone to news-related price movement and organize these somehow.
- Bear Market: Bad news crushes, Good news is all but ignored
- Bull Market: Good news rallies, Bad news is all but ignored
Macroeconomic Analysis and World Events:
- ES-mini movement
- Regularly analyze the overall market as if it were an individual stock.
- Advancer-Decliner Ratio should be high and trending upward when planning to go long.
- Federal Reserve action
- Regulatory environment in relation to the overall market and individual stock or sector
- Natural Disasters in relation to individual stock or sector
- Trends within the indexes will have a large impact on trading strategy.
Finer Points:
- Bear markets present an opportunity to spend more time researching & selecting stocks that have the greatest likelihood of large moves upon reversal of trend. Plan ahead for the rebubble.
