How to Sort Exported Daily Graphs Data:
1. Get the daily printed product company index report.
2. Delete any issues that do not fall under these criteria
Price: Must be minimum of $15/share
Group RS: Must be minimum of 70
EPS: Must be minimum of 80 (70 during non-bullish market trend)
RS: Must be minimum of 80
ACC DIS: Must be minimum of C
SMR Rate: Must be minimum of C (no issues with two ‘C’ ratings)
ROE Must be minimum of 17%
Float Must be below 50
3. Extra fundamental criteria to look for:
Annual earnings should be up at least 30% or more for each of the past three years.
Quarterly earnings should be increasing in the past quarters with the latest up 25%
Sales should be increasing in the most recent quarters, with the latest up 25%
4. Go through remaining issues on the better ratings and check technicals
5. Create watch lists for the coming week:
Delete stocks that have already broken out, do not fall under criteria, or show poor technical performance. Keep stocks that are still forming.
See Excel Spreadsheet for samples of past winners
If no decent issues are seen wait till next week.
Notes:
Theory - Where in the handle to purchase in advance of the breakout. (3 - 4 day pattern)
Remember to follow rules in identifying handles - must slope downward.
· The price pattern for the first 2 days MUST be tight.
· Look for a day in the handle where volume will be VERY low (half average volume or less) with price ending lower - nobody wants to sell!
· The volume on this day should be lower that the volume on the previous day. This is more recognizable and safer if the previous day's price also ended lower, if this is not the case than at very least the price pattern should be tight by both days.
· The next day will show an increase in price and an increase in volume compared to the day before,* but not too strong. Volume may still remain below 50-day average.**
· The price should close towards the high of the day.
· This is the day to purchase near the close, or by the opening morning price.
*Another variation is if the third day also drops in price, but volume remains below average. The third day's volume may be greater than the second day. The fourth day should increase in price and at least near the volume of day three, the higher the better.
**However, if the fourth day price advance is too large and volume increase is above average there may be a pullback. The advance is to quick for the weak holders and they take advantage by selling off.
This pattern may be easier to spot when volume is displayed in arithmetic scale.
The final breakout may take up to one month to form! (SEBL 8/31/99) Be patient you won't regret it!
REMEMBER! DON'T STICK AROUND FOR THE BLOODBATH TAKE YOUR 20-25% AND RUN!!!