The New Stock Picking Plan

As I mentioned, I think it will be more profitable and easier for many of you to have a limited number of stocks we track and trade. Of course, wherever's there's an opportunity, you have to take it so these are not hard and fast rules, but some initial ideas and I'd like some feedback from you all .


First, we'll have several lists for several market conditions. For a market like this, I'd have a "Swing Trade List" and one moving into a trend trade. For the Swing trades, I need to pick the stocks and then backtest strategies with 3C to find out which ones perform the best, however I think that components of the heaviest traded ETFS, with the highest weight and beta would be good for swing trades.

The reason being is that these stocks will see buying and selling regardless of their valuations because funds and ETFs that track an index are buying and selling these components to get their performance in line with their objectives. Like we saw in AAPL, they wanted to bully the market higher, whether AAPL is deserving of it's multiple's is irrelevant, what is, is the buying and if we can see that, then it makes it a good candidate. It's also got enough volume that hopefully we won't see shorts being closed by brokers. It is high priced, so obviously I want to find $10-$20 stocks that people can afford to take a decent position in.




For Trending Trades: Commodity ETFs and Commodity related companies as it is well known that commodities trade in trends far better then typical stocks-look at trends in oil, the dollar, gold, etc.

Also for trending situations, leveraged ETFS. their weakness is in a choppy market, their strength is typically in a trending market, so highly leveraged ETFS for trend trades.

Those are my thoughts for now. We may also add a short term trade 5 days or so, these will typically be volatile bio-techs and low priced stocks, high beta, and volume around $100k. These are favorites for momentum players and we have had many of these make 1 day 20-30% returns. One did 180% in 3 days. there's a particular moment when these trades take off-these will be on a scan basis as the sector rotation in these stocks is quite frequent.

We'll also have market coverage, but I think from what I have seen in backtesting systems, a few stocks, meant for a certain trading system work better then a scatter gun approach.

Feed Back?