Sunday, 6 March 2011

Stock-picking report

Today’s task: choose a stock to buy with the money that will be rejoining cash tomorrow morning (actually, it has already arrived in my account).

Screen:
  • Schwab Equity Rating = A, B, C, or D (but not F)
  • MACD = Recent cross above signal line
  • Price compared with 50-day moving average = Moderately above
  • Price compared with 10-day moving average = Moderately above
  • Parabolic SAR = Bullish
There are 39 matching stocks in Schwab’s universe.  Of these, 19 did not have gains on Friday so I ignored those.  Here are the other 20:
Company Yearly gain Indicators Chart
Symb Name Hold MACD ADX PPO pSAR Trend Sign
ADS Alliance Data Systems 35% 25% 35 +0.06% 12% Hold
AWI Armstrong World Industries 30% 2% 24 +0.03% 10% Hold
CALD Callidus Software 70% 85% 16 +0.09% 3% Hold Spinning top
CROX Crocs, Inc. 146% 28% 20 +0.11% 7% Hold
DKS Dick's Sporting Goods 52% 45% 20 +0.05% 6% Hold High wave
DPZ Domino's Pizza 25% 14% 17 +0.09% 7% Hold
ELMG EMS Technologies 34% 5% 14 +0.59% 6% Hold Spinning top
GCO Genesco Inc. 48% 51% 18 +0.20% 7% Avoid
KR The Kroger Co. 4% 8% 33 +0.04% 5% Avoid Long white
LINC Lincoln Educational Svcs −36% −4% 12 +0.39% 8% Buy Confirmed
MPX Marine Products Corp. −3% −15% 14 +0.17% 7% Hold Spinning top
MCRS MICROS Systems, Inc. 57% 6% 24 +0.26% 5% Hold
HK Petrohawk Energy Corp. 1% −18% 18 +0.09% 6% Avoid Long white
PII Polaris Industries 58% 52% 21 +0.07% 6% Hold
PCLN Priceline.com, Inc. 99% 106% 18 +0.24% 6% Hold
REGN Regeneron Pharmaceuticals 49% 2% 27 −0.01% 5% Hold
SPN Superior Energy Svcs 84% 35% 15 +0.27% 8% Hold
TLEO Taleo Corp. 34% −5% 14 +0.03% 7% Sell? Doji star
TMK Torchmark Corp. 31% 9% 20 +0.01% 3% Buy Confirmed
WYNN Wynn Resorts, Ltd. 93% 29% 25 +0.25% 6% Hold Spinning top

For “Yearly gain”, the Hold value is how much I would have gotten if I bought the stock a year ago and just held it; the MACD value is how much I would have gotten if I spent the last year buying the stock whenever MACD(10,30,9) turned positive and selling whenever it turned negative.  Green means MACD yields *more* than just holding the stock; orange means at least half as much; red for even less.  The purpose of this indicator is to tell me how effective MACD (and therefore PPO) is as a predictor for when this stock will produce gains.

The Hold value comes from Google while MACD comes from Best Charts.  The “Indicators” all come from StockCharts.com.  The “Chart” columns come from AmericanBulls.com.

ADX is Wilder’s Average Directional Index or DMI(14).  Green is for values between 25 and 35 (“strong trend”), orange for 15-25 (“weak trend”), red for others.  Schwab says 25 means “buy”; Craig Ferguson says 25-30 is good while 50 means the trend will end soon.

PPO is the Percentage Price Oscillator or PPO(10,30,9).  Positive values indicate a rising trend in recent days.  To avoid bad stuff that has happened in the past, I don’t buy stocks whose PPO is less than +0.10%.  I have not defined an orange range for this indicator.

pSAR is the Parabolic stop & reverse calculation.  I use pSAR(0.2,0.2) for my stop price, so its value is how much risk I would be taking if I choose this stock to buy.  It’s hard to know what colours are appropriate here.  In recent days I have done well with ENTG and TNA, which had 6% stops, so now I’m thinking that maybe 7% could be reasonable. Most 2% stocks have not done well except CBS which did great.  Most 3% and 4% recent stocks did poorly, but troubles in the Mideast interfered.  For now I’m using orange for 2%, 3%, 4%, and 7%, green for 5% and 6, red for others.

Trend indicates whether AmericanBulls thinks I should own this stock or not, based on their automated analysis of its candlestick chart.  Their values are Wait, Buy-if, Buy-confirmed, Hold, Sell-if, and Sell-confirmed.  Sign is today’s candlestick pattern if they recognize one.  I treat “Confirmed” as a sign since they get it from the chart.

* * * * *

Clearly, PCLN is the winner.  It has no red indicators and only one orange.  The runner-up would be GCO because its only red indicator is from AmericanBulls, which I’ve just started using and I don’t know yet how much trust to put in them.  CALD, DKS, DPZ, and PII have only a single red indicator which might improve in a day or two, while CROX, MCRS, and WYNN are not going to get better any time soon.  LINC is an interesting case: so far I have not tried purchasing any stock that has lost value overall for the last 12 months, but if ADX and pSAR improve then this could be a candidate.

I have put in my purchase order for PCLN, with a 6% stop.

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