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Scanning Six Ways to Find Stocks of Interest

Stock scanner questions link. This scanner will scan thousands of stocks so you can more easily find charts with breakout patterns, stocks with attractive “setup" 5patterns, reversal patterns, and other “watch list” candidates.  See a list of the stocks we scan for our reports.

Before we get into a description of this scanner, however, you should be aware of the fact that there are more than 6 other scanners on this Web site. For example,
1. A free list of stocks in database with greatest momentum is at Momentum List
2. A free list of stocks that just surged in price and volume is at Surges
3. A free list of stocks making new 6-month highs is at New Highs
4. Also, see Focus on Setups to Reduce Risk. 

Our other scanners focus on such things as gaps, pre-surge setups, Bollinger Band squeeze alerts (see the StockAlerts Scanner), breakouts (see the Breakouts page), and so on. This page describes a scanner that does not focus on these more specialized alerts. Instead, it is designed to detect the early stages of any significant trend.

To see how current these lists are, click on New or Old? 

A crossover of the closing price and a moving average is very uncertain and subject to whipsaws. By using a short moving average instead of the closing price, we reduce whipsaws considerably. Taken together, these signal generators act as a kind of radar, detecting action wherever it occurs over a wide spectrum of sensitivity levels. These alerts are intended to draw your attention to potentially interesting developments very early in their development. You will still have to review the stocks visually and possibly even monitor them a few days to see if the situation under development calls for action on your part.

What Does This Stock Scanner Do?

People use scanners to look for gaps, new highs, breakouts, Bollinger band penetrations, or whatever. However, the bottom line is that these events are believed to be the beginning of significant price movement in the same direction (a new trend). If a new trend actually develops after one of these events, that new trend will produce a moving average crossover early in its development. New trends may be preceded by a price gap, a breakout through resistance, a Bollinger Band penetration, or whatever.  However, scanning for moving average crossovers (with a broad range of sensitivities) can detect all new trends regardless of how they get started.

People use stock "filters" and "scanners" in an attempt to buy early when a stock is surging, starting a new trend, or undergoing a price reversal. Those are the bottom line purposes of most people who use scanners. The bottom line purpose of this scanner is to help you do precisely that--to find stocks that are just beginning a new trend. It scans thousands of stocks using 6 different moving average crossover systems having a variety of sensitivity levels, looking for crossover events in either direction. It generates an alert for each crossover, names the stock and gives its symbol, identifies the moving averages involved in the crossover, identifies the direction of the crossover, looks for volume surges, and gives price and volume surge information.  We scan thousands of stocks using the following alert generators.

4x9x18 triple MA system (For details, see the R.C. Allen System page),
5x20 dual MA system (ala Donchian), (5-day MA crosses 20-day MA with a volume surge),
5x50 dual MA system, (the 5-day MA crossing over the 50-day MA with a volume surge),
10x20 dual MA system, (the 10-day MA crossing over the 20-day MA with a volume surge),
10x50 dual MA system, (the 10-day MA crossing over the 50-day MA with a volume surge),
13x30 dual MA system, (the 13-day MA crossing over the 30-day MA with a volume surge).

The scanner's systems form a detection "net" that should be able to detect any emerging trend at an early stage of development. The trader can therefore be alerted to the existence of an emerging trend by the more sensitive systems and can review the stock immediately to see if it makes sense to take a position. Alternatively, the trader may opt to wait for the stock to register on another system with which he or she is more comfortable and evaluate or re-evaluate it then. Obviously, a stock beginning a trend will eventually register on all of these systems at one time or another as the trend develops.

Let's say your initial interest is in finding Bollinger Band breakouts. While the crossovers do not find Bollinger Band alerts specifically (see StockAlerts for a scanner that will do that), they will detect any trend that results from a Bollinger Band breakout. Sometimes one of the systems in this scanner will detect a new trend before a Bollinger band penetration takes place. Of course, the more sensitive the system, the more subject it is to false signals.  However, the more sensitive systems can give you a heads up about a developing pattern which you may or may not decide to act upon, and if you decide not to acrt, you might use a less sensitive system to alert you when you may consider the pattern to be more significant.

This is not to suggest that this scanner should be used as a substitute for the StockAlerts scanner. It does not find specific patterns like a Bollinger Band penetrations after a squeeze, or gaps, or the other specific configurations that StockAlerts finds. It was not designed to do those things. However, it does do a great job of finding new trends early. In other words, if a Bollinger band alert is generated by the StockAlerts system or a gap is reported and a trend actually develops, then this scanner should detect it at some point.

We display the price change so you can spot any price surges. Obviously, a crossover with a price surge is of greater interest than a crossover without a price surge. This metric can be used in conjunction with volume changes. We display a volume surge measurement by which you can screen your candidates.  You can filter the results by requiring that the volume surge be of a certain magnitude.

Because the database that is being searched is large and because there are 6 different alert systems looking for signals, the list could be long at times. We therefore rank the alerts according to the volume surge that occurred on the day of the alert and select the top 150 (we increased the size of this list when the R.C. Allen alert system was added).  For example, if 500 stocks generate a crossover alert, we would list only the 150 with the greatest volume surge.  However, sometimes there are far fewer than 150 crossover events.  For example, on some days the list migh have less than 50 stocks on it.  The volume surge filter that is used in a scan is posted on the report, but the minimum of the stocks on the list might be much greater than the minimum of the filter.  A volume decrease undermines the credibility of an alert. The volume increase is posted for those who want to filter with stricter requirements.

Often a stock that has just had a cross of its moving average will also be in a "setup pattern." Look for setup patterns that suggest a significant move is likely to take place soon (there are demonstrations of pre-surge "setups" near the bottom of the "Stock Alerts" page).

Top stock traders monitor a large "watch list." The Stock-Scanner can be a great tool in helping a person create such a list. When a signal is generated and the stock chart is reviewed, it may be obvious that an immediate purchase or sale is appropriate. If not, the stock can be put on the "watch list" and monitored for a "trigger event" or some subsequent surge in price or volume that convinces you that it is time to act. In other words, Stock-Scanner can not only find stocks calling for immediate action, but it can also be a useful tool in building a watch list of stocks "on the verge." It can "feed" a final stage "watch list" with likely candidates. It covers a large number of stocks, saves considerable time, and adds discipline to the search for investment candidates.

The Alert Table We Generate

If a stock's 4-day MA price crosses from below to above its 9-day moving average and then its 9-day moving average crosses above its 18-day moving average with a surge in volume, an alert is generated that reads, "AllenU," meaning "R.C. Allen Up Alert."  On the other hand, if a stock's 4-day MA price crosses from above to below its 9-day moving average and then its 9-day moving average crosses below its 18-day moving average with a surge in volume, an alert is generated that reads, "AllenD," meaning "R.C. Allen Down Alert."  Similar alert signals are generated for the other moving average systems. If three alerts are generated simultaneously, they are all reported. For example, the report might read "AllenU 5x20U 10x20U."  The percent change in price for the day
(%∆) is in column 5. The percent change in volume for the day is in column 6.  The 25-day momentum is under the heading "Mom."  The meaning of the other columns is self-evident. Look for a volume surge to validate price surges and crossovers (a price surge of 2% on a 50% decrease in volume is not very promising, but a price surge of 2% on a 50% increase in volume is). If there is a price surge on a crossover that is accompanied by a significant increase in volume, the situation is definitely worth a careful inspection.  The following is a sample taken from an old list and should not be considered current.
[Please note: Some of other alerts crowd a number of R.C. Allen alerts off the list.  So, if you are primarily interested in R.C. Allen alerts, see the R.C. Allen alert subscription.  It generates more than twice as many R.C. Allen alerts as this subscription.] 

This table shows 12-day momentum.  Future tables will show 25-day momentum

Sample taken from a subscriber list

Did You Know?

     The Valuator does not report PE and PEG ratios based on last year's obsolete data. Nor does it try to look ahead a full year (analysts are notoriously inaccurate when they try to estimate a year ahead). Instead, the 1-year earnings estimates it uses for computing PE & PEG ratios look ahead only about 6 months (6 months past + 6 months future). We believe this is far more accurate. Also, the market tends to look ahead about six months.
     The Stops tool computes trailing volatility-adjusted stop losses that can be adjusted to match your tolerance for risk and investment time-horizon. Let the stock have just enough room for its "normal" fluctuations as it climbs (each stock is different), but cut losses quickly when it declines more than is "normal" for that stock.
     StockAlerts can help you find stocks for your watchlist that are about to surge.

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     A study has been made of the search engine entries people make, where they land on the Internet, and what they do after landing. It turns out that people tend to be a bit too "jumpy" when they surf the Web. If they do not instantly see what they are looking for on their "landing page," they jump to another site. They often jump when precisely what they are looking for is on the same site where they landed but on another page. How could that apply to this site? We have a number of pages, several tutorials, and two product offerings that deal with stop losses. These are quite different from each other. The search word combination a visitor uses may simply connect to the wrong page. Even a change in the word order of your entry can make a difference in your "landing place." If you don't see what you want, it could be well worth the time it would take to check our Index link on the Home page.

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