re: daytrade diaries....wednesday, page-3

re: daytrade diaries....wednesday Morning HF, Ipod and all


During the past couple of years, when I was primarily swing trading, I often employed the scanning feature in my charting program to find potential trades.

Now as a daytrader, I have for the most part built up watchlists of big volume mid cap stocks to monitor and trade from. A couple of days ago while trying to find new intraday moves it occurred to me to revisit the scan, and this is what I have come up with so far.

The Slow Stochastic Oscillator is a momentum indicator consisting of two lines, %K and %D, which swing between oversold and overbought levels in a range of 0 to 100. Typically a stock is potentially oversold when it crosses below 20, and overbought when it crosses above 80.

To find stocks which were potentially about to rally I set up a simple scan where the Stochastic was crossing up above the 20 value. For this I only used the fast moving %K line, with a 10 day period and no smoothing. Added to this were volume and price parameters so that I could look within certain price ranges and filter out illiquid stocks.

A scan for small and mid caps:

Price [DLY] between .50 and 4.00
Volume greater than 300k
%K Slow[DLY](10,1) crosses above 20.

Among the results for this scan on Monday were - AAX CGF CXC GWT and RIV. Of these, so far RIV had a strong rally on Tuesday and CGF and GWT are showing signs of wanting to run.



What is particularly interesting from these results, is when you combine this information with the daily ASX short sell data. RIV has been a heavily shorted stock, with the number of new shorts decreasing in the last few days – and the two day rally suggests shorts are being covered.

GWT was even more heavily shorted and new shorts positions were down on Monday, so this could be the next one to watch for a short covering rally.

Here's a few more results from this Stochastic scan: AUW LNC MCR MEO PBG PPX SDG.

The next scan I am trying out is also a Stochastic scan, but this time it is a crossover scan of the %K (fast) and %D (slow) lines. More on the results of that later.

Good trading