Today's Tip #2: Using a watch list to find stock possibilities.
There are many ways to get new stock possibility ideas. Some programs we developed will look at all the stocks in a given index and find stocks that only match multiple criteria requirements. Sometimes, these complex programs can take a very long time to run.
But sometimes, I'm really busy and want to use something quick and easy. In that case, I will sometimes look at one of the real time index-component lists we mentioned yesterday with some alterations. Below is a chart posted of yesterday's Transportation index's component stocks.
Note what I did here ... beside each stock listed, I have two columns. One shows the 5 day average volume, and the second shows the 20 day average volume. I typically sort on the 5 day volume and compare the volume to the 20 day average volume.
The theory is that if something unusual is going on, the 5 day average volume will be greater than the 20 day average volume. So, these become quick candidates to look at to see if they are worth watching, analyzing, or trading.
Next, I will pull up a chart of the stocks with noticeable volume changes and also observe their 30 day RSI (Relative Strength) reading. I marked four stocks with volume increases yesterday and marked what their RSI's were showing in the graph below. I also marked the percent volume change for each.
Let's now look at these stocks. (NOTE ... all the charts below are 90 minute charts.)
* AMR, and UPS had increases in their 5 to 20 day volumes but the increases were not substantial ... 6.88% and 2.81%. Now, look at their charts below.
Not bad ... moving up and showing up trending.
Now, let's look at the chart for GMT which had a more substantial average volume change of 25.05% with a positive RSI.
Here is its chart ... note how the stock has been having a substantial up move. See the next chart ...
Now, this last chart of OSG is different because the its Relative Strength was negative, and its volume change was 80.29%.
So, something is going on here and it is not positive like the other stocks we looked at.
Looking at OSG's chart, you can see that this stock gapped down last Friday, and was 6% lower yesterday.
... I hope this gives you some insight on a quick way to find stocks with changes worth looking at. Have a great day and we will see you tomorrow.