Stock Ideas in the Bear Scans, Psychology of the Crowd

Monday, 22 December 2008 23:00 by Admin

For the past 4 days the major market index (^XMI) were bearish but during those period the bullish industry continued to rally and bullish scans Surprised was still able to pick up individual bullish stocks. Lately those scans returned only a few stocks which indicates the market is now a crowd of bears. This observation is commonly recognized as the primacy of MARKET, followed by SECTOR and STOCK.

The link or filter that I am going to introduce has something to do with the psychology of the crowd. Investing books have covered this topic. I won't cover it here but hopefully I can post something about it later. (I just need to finish this posting for now) The filter will look for bearish stocks in the last 5 days but stocks with good fundamental scores in Validea, Price Sales and PE Growth guru strategies.

Bearish Stocks with strong fundamentals

You can vary this filter to include other guru scores like PE Growth. This is a short-term strategy so prepare to plan your exits. The following are suggestions/tips to plan your entry for a profitable trade:

1. Enter when the market gets bullish or the market is trending up. You can use candlesticks and trend analysis to determine a bull market.

2. Use Stochastics hourly charts. Buy when it's oversold and the signal is rising or when it's below overbought and the signal is rising.

3. Make sure that the recent bear indicators was not triggered by news or earnings report.

4. Don't forget to place your stops(of course).

Note: The link above was updated to get the best results.

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Comments

November 9. 2009 08:58

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The Asian and European markets can be used as a possible guide to get an idea of which direction the US market is likely to go in. For example, if the Nikkei is down 3%, the DAX is down 2.3% then there is a strong possibility the US Futures and stocks will end up down overall. The US futures will have been trading down in their overnight session with Asia/Europe aswell, so there could be an immediate rally at the 9am open before moving down further.

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The fact that equities are being sold down, despite the lowest interest rates in recent history, simply means that the market doesn't see growth ahead for very many businesses. - John Malone