Scanning 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" patterns, reversal patterns, and other “watch list” candidates.

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 daily list of 50 stocks with greatest momentum in database is at Momentum List
2. A free daily list of stocks that just surged in price and volume is at Surges
3. A free daily 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, gives price and volume surge information, and provides a Relative Strength (RSI) measurement. The Systems Used We scan thousands of stocks using the following alert generators.

7x13 dual MA system (the 7-day MA crossing over the 13-day MA with a volume surge),
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 tightly woven 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 the systems in this scanner can detect a trend before a Bollinger band penetration takes place. For example, the following chart of Apple (not recent) shows green Bollinger Bands. The shorter moving average (purple line) closely follows the stock and the longer moving average (the dark blue line) follows the stock at a greater distance. The crossover occurs at the red arrow. The upper Bollinger Band penetration occurs three days later. True, the shorter moving average only briefly dipped below the longer average and then generated a signal on its crossing back above the longer average, but the chart does illustrate the point.

This chart illustrates how a dual moving average crossover system can give a signal before other approaches.  That is not always true, but here it is.  Incidentally, the averages did not give a sell signal as soon as we would have liked.  That is where a volatility-based stop loss or a stop loss under the short consolidation pattern can be a big help.

This is not to suggest that this scanner should be used as a substitute for the StockAlerts scanner. It does not find 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 and a trend actually develops, then this scanner should detect it. The StockAlerts detection system is for those who want to know immediately when a band penetration takes place. People who use this scanner, on the other hand, are interested in a band penetration only if a trend begins to develop after the band penetration.

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 two volume measurements by which you can screen your candidates. The first of these is the 1-day change in volume. The second way we use volume is by comparing the 3-day moving average of the volume to the 3-day moving average of the volume as of 4 days before. Sometimes a volume spike will occur just before the signal. A 3-day average volume measurement will be higher than it was four days earlier if there has been a recent volume spike. You can filter the results by requiring that the volume surge be of a certain magnitude.

In addition, the Welles Wilder Relative Strength Index (RSI) is provided for each stock that generates an alert. The reason for including the RSI is that it provides an additional screening mechanism for those who want it. If a stock has an upward surge during its crossover, the RSI will be higher than if it does not. For example, a person could "filter" through the stocks that have given an "Up Alert" by requiring that such alerts be accompanied by a certain RSI reading before it becomes truly "interesting."

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 30. For example, if 500 stocks generate a crossover alert, we would list only the 30 with the greatest volume surge. In the past we would have listed up to 100, but after a complaint about there being too many to review, we decided to narrow the list to the 30 most promising stocks for the day. 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. You can use the change in the 3-day average volume and/or the RSI yourself as additional filters. 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" in the alerts videos and 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 7-day MA price crosses from below to above its 13-day moving average with a surge in volume, an alert is generated that reads, "7x13U." On the other hand, if its 7-day MA price crosses from above to below its 13-day moving average with a surge in volume, an alert is generated that reads, "7x13D." 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 "7x13U 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 change in the 3-day average volume relative to the same average four days ago is in column 7. 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). 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. Some lists will be longer and some will be shorter than the following list (this list has been shortened from the original). A new list based on the current day's action is generated daily for subscribers.

Date Sym Alerts Close % Chnge 1-Day Vol Change 3-Day Av Vol Change RSI
TELECOM ADR B TEO 7x13D  5x20D  25.33 -2.58 60.46 3.12 41.55
NUANCE COMMS NUAN 5x20D  13x30D  18.96 -4.24 207.4 70.91 39.1
BSCH ADR STD 5x20D  11.89 -3.25 71 48.51 51.59
ISHRS TRANS DJ IYT 10x50U  93.44 1.54 95.75 5.11 57.35
ADVANCE AUTO PARTS INC AAP 10x50U  65.25 -1.14 111 176.16 56.38
UNIVERSAL FOREST UFPI 7x13U  5x20U  10x50U  37.61 -3.02 117.22 134.42 48.66
AMER EAGLE OUTF AEO 10x50U  16.03 9.12 265.62 93.61 70.3
REGAL ENTRTNMNT STK A RGC 10x50U  13.79 5.43 68.25 221.04 71.16
ANWORTH MORTGAGE ANH 10x50U  6.97 -0.43 69.21 13.38 49.86
PACER INTL PACR 7x13D  10x50D  5.35 -22.35 761.33 332.37 31.52
TORO TTC 7x13U  5x20U  5x50U  62.5 2.06 322.86 63.74 57.98
KRAFT FOODS STK A KFT 5x50U  31.11 -0.42 154.26 87.18 50.79
MIDAS GROUP INC MDS 7x13U  5x20U  5x50U  8.29 16.11 1284.67 368.29 61.79
THE9 LTD NCTY 5x50U  8 0.76 68.2 10.18 61.06
MOLSON COORS BREWING CO** TAP 5x20D  5x50D  45.48 -4.39 324.64 128.35 33.74
ROFIN SINAR TECH RSTI 5x20D  5x50D  39.46 4.28 73.13 7.44 59.03
INSIGHT ENTR NSIT 5x50D  14.45 -2.96 66.4 11.2 49.47
TWN SEMICONT MAN ADR TSM 5x50D  12.84 -1.91 91.6 54.86 43.68
Union Pacific UNP 5x50U  10x20U  97.51 1.73 52.68 4.75 61.48
DIODES DIOD 7x13U  10x50U  5x50U  10x20U  13x30U  29.62 15.52 650.92 188.85 68.02

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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