Each weekend, I spend several hours running various scans…thumbing through several thousand charts. The objective: find the set-ups that offer up the entire package for the upcoming week.
What I mean by entire package, is based solely on preferences and biases I have developed over my career. Everyone’s package is different than mine. However, mine is far superior.
For technicians, a great set-up has certain characteristics, but none more important than an actionable entry point, and a definitive measure of risk. This means you can visually identify the path of least resistance for prices, and a level in price in which prices should not move. Should prices move to this level, it would ultimately mean you are wrong, and would trigger a close of the position.
A few other aspects of defining a great set-up are:
Volatility. I prefer trading in stocks that move. Since I trade in options, the more the stock moves, the more money I make. When I look at the average price swing of a stock, I refuse to trade in anything that doesn’t move at least 10% from a swing high, to a swing low.
Another aspect of volatility that I prefer, is recent volatility. I prefer to see a traditionally volatile stock in a holding pattern. Consolidation is typically indicative of prices that are getting ready to “pop.” As you know, I prefer to find stocks before they “pop.”
Liquidity. I prefer liquid stocks, and most definitely liquid options. These can be parameters built into a scan.
Other considerations will ultimately depend on where the market is within its current cycle of risk. Depending on the market’s risk appetite, I might want to find stocks with high short interest. I might want stocks in a particular sector or industry group. I might even find that stocks under a certain price level, with bad fundamentals are the flavor of the week.
Scanning and trade planning are something we will be spending a lot of time on in the near future. While it seems that many here are capable of banking coin, post market prep work and understanding how to locate potent trade set-ups are an invaluable skill that separate most market participants from good to great at this sport.
Speaking of locating potent trade set-ups, this is what I’ve come up with this weekend. Enjoy.
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Damn solid. Muchas gracias for what you’ve passed along, and I’m really looking forward to future lessons.
As always, thank you Option Addict. Solid is correct, good stuff.
SCTY, can you please provide feedback with the post earnings move downwards. Thank you!
Let them consolidate a little while. I like YGE or LDK for now.
Hey Boss, what u think of sub $10 CETV? I think it fits in your volume pocket requirements, no?
Sure does. I like the look here.
Love all the ideas (charts)..thinking some unxl or gmcr here. Do you have your druthers?
I own some GMCR and want UNXL.
so you waiting for UNXL to soften a bit??
After an earnings announcement, I like the volatility to die off.
nothing wrong with a man confident of his package
what do you think of lnkd, looks like it’s forming a flag
I’m in P…but LNKD looks easy to manage.
You just keep delivering awesome content. You should write a book and publish it on Amazon Kindle, Google Books, I-books, and other online distributions of digital content.
Thanks Jimmy.
OA, any thoughts on ONVO here? been on a solid run
I’m holding for higher.
OA, great write up. TSLA is suffering today due to downgrade. I am thinking of buying calls before the close for a quick move and buck over a day or so. It shows oversold on hourly charts. Nice set up entering into the close. Thoughts?
I would intentionally look at stocks that are down today for opportunity: TSLA, PBR, WLT, LITB, YOKU. I like your idea.
Thanks OA. Bought TSLA just before the surge that happened just now. Love it when the Market and I are tangoing like this.