First you have to find stocks to analyze.
Finding stocks:
Go to http://yahoo.com and open an account if you don’t have one.
Click the Finance Quicklink on the left
Rollover ‘Investing’ tab on the top, click Stocks
Under Research tools, click Stock Screener
Under Launch Screener, click ‘Launch HTML Screener’
Leave all selections at ‘Any’ except for the following:
- Share price: $5 Min, $30 Max
- Profit margin: 0% Min, Any Max (profitable company)
- Price/Earnings Ratio: 10 Min, Any Max (earning company-goes to share price)
- Avg Analyst Rec: Buy/Hold rating (2) or better
- Click Find Stocks
- I’m looking for about 200-300 stocks
- I manually delete any stock with Average Volume less than 300,000 shares. I do this for liquidity, but down to 200,000 is generally OK.
This population is the highest quality stocks as indicated by the Analyst rating of 1.0 – 2.0. Since you will be analyzing them individually, manipulating the Share price, Profit margin and Price/Earnings Ratio will change the returns.
A spreadsheet program is the easiest way to move the stock symbols into a list. I use Excel, but OpenOffice.org has a fine one as well.
This is the tedious part. The list has to be copied and pasted 20 lines at a time. All portions of the group (and nothing else) have to be copied into the spreadsheet. This has to be done 5 times for each 100 selections.
Copy the headings only the first time.
In the spreadsheet, delete all columns except the Stock Symbol column and sort this alphabetically.
We now have our selections. You may leave them in the spreadsheet, but I prefer using Yahoo Portfolios to store them. I can then tell their share price at any time.
Portfolios
Back at Yahoo Finance, Rollover ‘My Portfolios’ at the top.
Click ‘New Portfolio’ and add up to 200 Stock Symbols from the spreadsheet list. Add a new Portfolio if more than 200 stocks. I name mine, “Screener 1″ and “Screener 2.”
Be careful with your mouse in the Spreadsheet. Touching a Symbol name can select it.
Clicking ‘Finish’ for the Portfolio will display ALL the stocks in the Portfolio in your choice of predefined formats or you may design your own format. I like ‘Real Time’ if you want to watch all your stocks at once during the trading day.
I have designed a Yahoo home page that has Market defining stocks (Dow, Nasdaq, S&P100, S&P500, SPY, QQQQ, the CBOE volatility indexes for the Dow and Nasdaq, and the shares traded on the Dow and Nasdaq.
The way these help me understand market conditions, is that markets fall of their own weight. If the market settles lower, it may simply be that fewer people are buying. Selling goes on all the time (people have expenses). The volatility indexes are counter-indexes to the markets. If the Dow is healthy and rising, the volatility indexes go down. We want them at around 30 or lower.
Analyzing stocks.
Start with the stocks in your ‘screened’ portfolios and analyze them one at a time with Yahoo.
Click a stock symbol or ‘Dow’ or ‘Nasdaq’ on your Yahoo home page.
This brings up a page for the stock with a lot of information on it, including “real time” prices. Just below “real time” is “Last Trade” which is 20 minutes ago. Watching these two show if a stock is going up or down. There is also a small daily graph.
Make another duplicate page. On this one, under ‘Charts’ click ‘Basic Tech Analysis.’
Construct this page format – the page will refresh after each indicator is clicked:
- Range: 3m (months)
- Moving Avg: EMA: 5, then 20 (gives you two tracking lines)
- Indicators: MACD, Slow Stoch, W%R
- Size: L (my personal preference)
Now we can get to work.
Top graph is Price (up to yesterday) with two tracking lines of 5 days and 20 days. The price line should be rising and reside above the two tracking lines.
Next graph is MACD. The vertical lines should END ABOVE the Signal line. If the vertical lines are below the zero line, the lower end of the lines should start above the Signal line. If the vertical lines are above the zero line, the higher end of lines should end above the Signal line.
Next graph is Stochastics or ‘Stoch.’ The blue line (%K) should be above the red line (%D).
Next graph is W%R, a single tracker that should be heading up or hanging out in the upper region. It should NOT be heading down.
When is the best time to buy?
- Price above both tracking lines
- MACD lines rising with signal line following as explained. The best time to buy is when the vertical lines switch from the bottom of the zero line to the top of the zero line.
- Stoch %K (blue) above Stoch %D (red) and rising.
- W%R in upper region or rising to there.
When is the best time to sell?
- Price falling below both tracking lines
- MACD lines peaking or falling with signal line following as explained. The best time to sell is when the vertical lines switch have peaked and are starting down towards the zero line.
- Stoch %K (blue) below Stoch %D (red) and falling.
- W%R falling from the upper region
There you have it. Be patient. You are a hunter. Wait for the best time to pull the trigger. Don’t pull it too early or too late. And always put in a “Stop” order if the stock crashes you won’t lose everything. I set my trailing stops (moves with the rising stock price) for 3%.
Good luck and good hunting.
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