Originally posted by BigL
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Look for the following stocks
Percentage below 52 week high: Less than 5%
Price: Greater than 10
Ave Volume: Greater than 100,000
Price change last 3 months: Greater than 1
Price distance above SMA 20 days: Just above, Moderately above, far above
That gives me all the stocks hitting 52 week highs. From there I put that into a spreadsheet to do a pivot table and get a count on the sectors and industries. Gives me a good quick way to see what's the hot sector.
From there further research stocks in those sectors. I try to find good quality stocks in the hot sector. Fundamentals I perfer:
5 yr annual rev growth > 15%
1 year rev growth > 12%
Gross margins > 35%
Net Margin > 15%
Debt to equity < 50%
Return on equity > 15%
Normalized PE < 25% (or at least < the industry average)
current yield > 2%
5 yr dividend growth > 10%
Options - yes
Once I find a good stock, i look at the technicals to see if it's a good time to buy. Am I too late to the game or still have room to run. Criteria:
Price above 20 day SMA
MACD increasing
RSI - above 50 and increasing
Sometimes will look at the stochastics as well. Looking for them to be above 50 and increasing also.
Usually will hold these until price drops below the 20 day SMA, MACD lines cross, and RSI goes below 50. Sometimes I set trailing stops to get me out when at 1.5 or 2x the ATR amount. So it can peak and pull back some and I stay in but if it pulls back too much it automatically gets me out.
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