Commentary

Buy Signals on Active Stocks

Daily Stock Summary

These stocks were selected by this scan command on Stockcharts.com –

[Type=stock] and and [country = us] and [daily sma(20,daily volume) > 8000000] and [daily sma(60,daily close) > 15] and [group is not ETF]

That produces a list of 62 high volume stocks.

The part of the list presented here includes those stocks that the algorithm is currently holding. The list is sorted by number of days held, and buy price.

Stocks that show for 7 days have been in the portfolio for at least 7 days. The profit and loss figure is for the 7 day period, not from the original buy. The fact that 4 of 62 highly active stocks have had continuous positive momentum readings for that long says something about the number that haven’t.

Stocks that show 0 for days held were bought at the closing price of April 18. Keep in mind that we regard the overall market as neutral here and 5 of the 6 buys had down days. On the other hand, none of them look bad.

AMD

AMD is green on the weekly but this area has been tricky to play for the last few weeks. There was a nice buy signal on April 1 at 26.36. The algorithm exit at 28.53 on was a fair exit but a human should have been disappointed to get less than 29.34 on any of the 3 days prior to that. There is a trade off between taking profits and taking money off the table at some point, but the idea behind trading a strategy rather than buy and hold is to avoid bad outcomes.

AMD might have broke a few hearts with the failed buy signal on April 12. The algorithm’s exit on April 13 for a $.50 loss was definitely competent, but a human trader would probably stay in there – the daily candle turned blue but it didn’t move much and reacted positively to the probe of the 18 day moving average. The support at this level looks positive to me.

Weekly Stock Summary

No stocks produced new buy signals last week. It appears that stocks bought at the close of the previous week made a small gain overall. I haven’t specifically tested whether a green weekly candle gives a more powerful daily buy signal than if that is not the case.

Daily Time Frame Probably Better then Weekly

DIS Weekly

The last 2 rising blue candles is a buy signal which the algorithm doesn’t look for – 2 strong bullish candles off of the 52 week moving average. It bought at the close last week, or a day too late.

DIS Daily

The algorithm went long DIS at 110.71 on March 28 and has stayed long. There is a question whether a human trader might have got nervous by the lower close than open candles on April 10 and 11 and sold – that would have been annoying.

The algorithm seems to perform well across different securities and time frames.

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