This Weekend's Scan

As I said, we'll be doing more stock picking and I've already set up the scan I want to use. Here's a look at the conditions and set up.

The conditions for this particular scan are as follows, price needs to cross below the 50-day moving average and on a multi-day high volume surge so we know that traders have been stopped out, at the same time 3C needs to be negatively divergent. Our first conditions are filled at the yellow arrow and where price is painted yellow. After that, as the market almost always does, there's typically a retracement back up to the moving average, so we want that to happen, but this time on below average volume. We want price to mov above the 50-bar moving average as this will sucker the longs back in as they have an affinity for the 50 day moving average. 3c still needs to be negatively divergent and at this point, the stock is a short candidate. We can use multiple timeframes and other indicators to look for a tactical entry, but even if we took the first entry signaled by the red price candle in AMAT at $15.61, watch what happens next as we are playing on the predictability of traders and Wall Street's predictable response.

After the entry, it's just trade management. Using the Trend Channel, AMAT would have stopped out in October with a 25+% gain. The Trend Channel can be set for swing trades or as in this case, a trending trade, furthermore, exits can be tweaked by using 3C and other indicators to give us earlier warning as to when a possible reversal or stop is taking shape.

AMAT wasn't cherry picked, it just happened to be the first symbol on my watchlist alphabetically sorted.

Take a look at AAPL which I have been posting recently.

I have been posting AAPL for the reasons I outlined in my Tech post, it had nothing at all to do with this scan, but it did have to do with a head fake yesterday which is still at a profit today and another head fake today, I think it just shows that this scan has called AAPL a short the last two days that we are taking advantage of the predictability of traders and Wall Street. I find it ironic that at the place the scan would have called for a short that we saw a beautiful head fake entry yesterday that quickly failed to the downside. So AAPL broke the 50-ma on increased volume, rallied back up to it, but the fine point is a head fake above it to draw in longs and it did so on weak volume, sounds like a great set up!

I'll be posting candidates this weekend.