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These system alerts are posted free on this site. Reports are fresh daily.
1. A free daily list of the 100 highest-momentum stocks in our database is at Momentum List
Its Signals & Alerts
On this page we provide a portion of the output of R.C.Allen's alert system. The complete list is reserved for subscribers. We also have other alert systems. For example, you may see a description of the alerts currently included in the StockAlerts subscription, by clicking on Current alert list.
Allen's original system is also being demonstrated on the "Market Review" page. To get a short summary or to order a subscription click on the "Products & Prices" link (third from the top) on the top left of your screen. R.C. Allen's system is a complete buy and sell system.
Alerts are alerts. They are not "buy" or "sell" signals. An alert means "analyze this." When one of our screens flashes an alert, it means only that certain setup conditions have been satisfied. It does not mean that all setup conditions are satisfied for a purchase or short sale. Inasmuch as an alert means only that a single set of conditions has been satisfied, the logical response to an alert is to make a visual inspection of the stock’s chart. Look for reasons to avoid taking action. For example, if the alert is an "Up Alert," look for reasons to avoid buying. One reason would be overhead resistance not far above the current price. If you can find anything that makes you wary or uncomfortable, it would be rational to walk away.
Here we identify a few of the stocks (listed below) in our stock universe that have generated a signal according to R.C. Allen's 4-, 9-, and 18-day triple moving average crossover system. The stock list we scan includes thousands of stocks (see "Trading This System" below). The system featured here was made popular by R.C. Allen (How to Build A Fortune in Commodities) as an effective tool for trading both stocks and commodities. However, even R.C. Allen did not consider the signals generated by his system to be "buy" or "sell" signals in their own right in isolation from their context. He simply argued that the commencement of a trend could be traded correctly by waiting for these averages to align themselves in a particular way. It may help to think of these averages as currents of momentum. When the "momentum currents" build to a certain level, an alert is generated. There is a specific alignment for the commencement of a downtrend and another specific alignment for the commencement of an uptrend. Of course there are considerations other than these alignments. You should make a record of any of the following stocks that you think are worth monitoring because this list changes quickly.
The Latest R.C. Allen Report
| This Scanner Result Obtained by Using a Minimum Volume Surge Requirement of 0% | |||||||
| Updated Fri p.m. After Close | Sym | Price | Volume | Vol% | RSI | 4-Day MA | Alert |
| Alert With Max Vol Surge Not Named | XXX | 3.23 | 4,508,000 | 3695 | 42.5 | Falling | Dn Alert |
| Crossovers | Up: 16 | Dn: 13 | |||||
For a brief summary of the main features and an opportunity to order a subscription, click on the word "Summary" in blue text. Summary
NOTICES
Because we are no longer registered investment advisors, we do not make personal investment recommendations. We do NOT recommend that any individual use this trading system for his or her own account. We also do not recommend AGAINST using this system. That is a matter to be decided on by you personally (perhaps with the help of a licensed professional securities consultant). If you use the system and the postings made here, you do so at your own risk.
The Alert System Used Here
1.) An "Up Alert" means that the 4-day MA is above the 9-day MA and the 9-day MA is above the 18-day MA. --- If a stock is rising, its shorter moving averages will move up faster than its longer moving averages. Waiting for all moving averages to align correctly gives time for momentum to build, and it helps a potential buyer avoid some false starts. This is one of the ways the strategy incorporates discipline. The alert to a possible "buy" signal occurs when the 4-day moving average crosses above the 9-day moving average. The actual buy signal occurs when the 9-day moving average crosses above the 18-day moving average while the 4-day moving average is still above the 9-day moving average. If at the time the 9-day moving average crosses above the 18-day moving average, the 4-day moving average is below the 9-day moving average, there is no signal unless and until the 4-day moving average crosses back above the 9-day. Conversely, a "Down Alert" means that the 4-day moving average is below the 9-day moving average and the 9-day moving average has just crossed below the 18-day MA.
2.) Furthermore, an "Up Alert" means that the 9-day moving average was below the 18-day moving average on the previous day. --- This implies the stock was recently declining and may be just beginning to rise. Here, the idea is to catch a stock at the beginning of a new trend. A "Down Alert" means that the 9-day moving average was above the 18-day moving average on the previous day. This implies the stock was recently rising and may be just beginning to decline.
3.) R.C. Allen said that "In a bull market, the volume of sales should increase as prices rise. If the volume does not increase, it may be a false move or 'trap.' Even though your charts may show a 'breakout' towards higher levels, the up move should never be trusted unless it occurs with an increase in the volume of the sales." The same thing can be said of down moves. If volume declines on a down move, that move should not to be trusted. On 3/28/11 our system found 110 R.C. Allen alerts. Of those, 106 were "Up Alerts" and 4 were "Down Alerts." On that day the market had declined and most of the alerts had a decrease in volume. According to Allen, such alerts are not to be trusted. When we filtered out the alerts with volume decreases we were left with 44 alerts of which 42 were "Up Alerts." Under the heading "Vol %" we give the 1-day change in volume on the day the alert is registered.
4.) The RSI is not part of R.C. Allen's system. We provide it so it can be used as a filtering tool. For example, you might decide that you are interested in those crossover setups where stocks have an RSI reading of 70 or some other figure.
5.) R.C. Allen only required the alignment of moving averages as described in item 1. What if you have an "Up Alert" in which the 4-day moving average is above the 9-day moving average but declining? This could be an indication that the signal may result in a whipsaw (a sell signal shortly after the buy signal). You can screen out such "setups" by using information in the column with the heading "4-Day MA." That column indicates whether the 4-day average is rising or falling. Therefore, in addition to the proper alignment of moving averages, you may use the 4-day moving average to provide added confirmation of the signal by requiring that it also be moving in the direction of the crossover. Stocks are listed as giving an alert based on a strict compliance with Allen's system. There are rare exceptions. Under Allen's rules, it is theoretically possible (though not common) for the 9-day moving average to be declining but still cross the 18-day moving average. This can happen when both are declining but the 9-day average is declining more slowly than the 18-day average. We have made an adjustment to our algorithm that requires the 9-day moving average to actually be rising in order for an "Up" alert to be generated on a positive crossover. Similarly, it must actually be declining to generate a "Dn" alert on a negative crossover. The idea is that we want to enter early when there has been a positive trend change (as indicated by a 9-day moving average that has actually started an uptrend). We are not interested in alerts generated, for example, when the 9-day moving average is still declining but doing so more slowly than the 18-day moving average.
6.) The "Alert" column identifies the type of alert generated. The entries there will either read "Up Alert" or "Dn Alert" (Down Alert).
R.C. Allen's system has been used successfully by thousands of traders over many years. If you cannot make it work for you, it is likely because you have not learned to implement it correctly. Richard Dennis, one of the world's most accomplished traders, once trained a group of very intelligent people to be traders. He gave them all the same rules and trading system. A few made millions but some were failures. It all came down to implementation. Those who followed the rules did well. Those who second-guessed their system did poorly. Emotions will be your worst enemy when it comes to trading. Losses are a part of every discipline. If you think you have a good discipline but you lose money on 15 consecutive trades, an emotional trader might be more inclined to abandon his discipline or even abandon trading altogether. Successful traders do not. They may re-evaluate their system and the way they implement it, but if it is a good system that others have used successfully, they will not toss it away.
In our own studies, we programmed a computer to trade various strategies. One of the very best strategies generated many more losses than gains. The losses were all very small but many of the gains were large. Yet, the system was quite profitable. Most humans would not have been able to implement the strategy successfully because all the losses would have caused them to abandon it. However a computer does not get depressed when it has a losing trade. It keeps implementing a strategy no matter what happens. The key for a beginner is to strictly limit the amount that can be lost on each trade. If you are a beginner, use only a very small portion of your assets for trading and diversify the small portion that you trade.
A Reason Not to Buy
*The lists you will find here are not personal buy or sell recommendations. They are merely reports of stock activity and technical signals generated by a single specific discipline. However, this system is well-known and widely followed. However, proper alignment is not in itself a sufficient reason to buy or sell a stock. Look at the chart below, for example.
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The moving averages aligned properly in the last few days charted. The blue line is the 4-day moving average, the red line is the 9-day moving average, and the purple line is the 18-day moving average. Notice the large price spikes that caused the signal. These are white candlesticks. They are followed by one more short white candlestick and then by a large black candlestick (the last bar) that undoes the work of the two preceding white bars. At this point, we should be observers only. Earlier, there had been sideways work done between $26 and $27, the lower boundary of which is marked by the horizontal black line just below 26. This area will offer some resistance when the stock rises. Another area of possible resistance is the downward sloping straight black line terminating at about 23.24. This is the trendline that defines the current downtrend. Lateral work (not shown) was done between $22 and $22.75 (and later between $21.25 and $22). All of this suggests there may be some support around $22. The 50-day moving average (the broken black line) is at $22.71 and the 9-day average is just above $22. If the stock is going to be worthwhile, it should stop the decline that started with the large black candlestick before it reaches half way into the first large white candlestick. Once again, that is at about $22. All of these levels, taken together, should give you an idea about where the stock can be expected to get support. If that doesn't happen, the wise investor will simply walk away. The foregoing notwithstanding, we are not very positive about the stock on a long-term basis...yet. Observe that the downward sloping trendline drawn through significant tops is still in control (the closing price is below it). This line acts as overhead resistance, and it is still declining and exerting downward influence on the stock. The 50-day moving average has not yet shown any signs of turning around. If you are bullish, you want it to be at least flat if not rising. It is still declining. Our guess is that this stock may have to do a little more work and build a base before it is ready to embark on a significant uptrend. However, nimble traders can still make a nice profit on it by capturing surges. These traders are the ones who will look for support at about $22 After all, a $4 gain on a $22 stock is a gain of more than 18% (not bad for a few weeks). Longer term investors should require more convincing. As you can see, a stock can have the correct alignment of moving averages for a purchase but the pattern itself may still not be "ready' or it may even be lousy (or dangerous).
While Allen's discipline is a popular trading system in its own right, the trading members of our company prefer to use it as only one of their screening tools. That is, its output notifies us of the recent emergence of certain technical conditions that make a stock interesting and a candidate for a closer look. We conduct further evaluation and analysis to determine if a stock should be bought or included on our "Watch List." We would suggest that you use the same approach.
In general, we watch for a setup, the absence of significant overhead resistance, and a "trigger event." With regard to this particular screen, a proper setup may exist if a stock is listed on this page and if there is no reason to be apprehensive about the chart pattern. If there is overhead resistance immediately above the current price, there is reason to be apprehensive. If there is no resistance there, a good trigger event might be a follow-through price surge on increasing volume. If the resistance is there, we might still consider it to be a "setup" but modify the trigger event. For example, we might consider an acceptable trigger event to be a follow-through price surge on increasing volume that takes the stock through that resistance. Some experienced traders may even wait for a subsequent test of support at the previous level of resistance and then a resumption of the up-trend.
Instead of using Allen's system to define the setup, some use it to define the trigger event. For example, the trader might look for good setups (a Bollinger squeeze with penetration of upper band, for example). These setups would have a context that is attractive. Then, they would wait for R.C. Allen's discipline to give the final go-ahead.
(Note: A discussion of the meaning of "support" and "resistance" can be found by clicking on "Free Tutorials" on the navigation bar and scrolling down to the section titled "Charts." Read all of that section if you are unfamiliar with these terms.)
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