MonthAugust 2020

Screening for Long Term Leaders

Based on a recent request, I created a MarketSmith screen to filter based on criteria that may be applicable to long term leaders.

Here’s my thought process on each of the criteria:

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Drawing a Channel in MarketSmith

A channel can be a helpful guide to visualize support and resistance. MarketSmith includes a comprehensive set of markup tools, with one of the options being a set of parallel lines (a.k.a. channel).

In the short video that follows, I’ll show you where to locate the markup tools as well as how to configure a channel on the Nasdaq composite.

It’s worthing noting, when you use a markup tool, anything you draw on screen will be saved. For example, if you markup a chart with a channel, when leave to view a different symbol, upon return, the channel will be restored. Pretty cool, huh?

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Making the Most of the RS Line in MarketSmith

I previously wrote an article about the RS Line: RS Line vs RS Rating – What’s the Difference? I explained the basics of the RS Line and the information it represents. What I didn’t cover are examples showing how to best put the RS Line to use – that’s where this post comes in.

As a quick review, the RS Line plots the performance of a stock versus the S&P 500. For example, if the S&P 500 is declining, and at the same time a stock is rising, that stock’s RS Line would trend up.

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It All Starts with Sales – Sales Acceleration Screen

In traditional CAN SLIM, strong earnings and sales are key. With that said, there are many excellent growth stocks that are good candidates for a watchlist, yet they have minimal or no earnings to date.

Many of my screens start with a similar set of criteria:

  • Price over $20
  • 20,000,000 in dollar volume
  • Composite Rating of 90+

I find this is a solid baseline, adjust as you like. With 20,000,000 in dollar volume, you are ensured there is adequate liquidity.

For this particular screen, notice the reference to sales acceleration for the last three quarters. For the most recent quarter sales, I’m looking for an increase of at least 25%.

FVRR is a good example of a stock from the result set that has strong sales growth, a monster move over the past few months, yet only one quarter of earnings posted.

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