trendscanner
265 posts
msg #88297
- Ignore trendscanner |
2/15/2010 6:11:54 PM
I’m much busier at work this year so don’t have as much time to spend on trading/investing or SF as I did last year. Still, I managed to get my first multi-bagger for the year recently. XCHO, in at $0.135 on Jan 21; it closed at $0.48 Friday for 350% gain so far. Hopefully won't be my last multi-bagger for 2010.
I’ve been using a variety of filters to screen for microcaps that look like they may be ready for a leg up. I look for companies that have promising charts plus some combination of proprietary and timely technology, game-changing patents, or some other differentiator that gives them a sustainable business advantage. Generally I want to find companies with a market cap between a few tens of millions to about 100 million, companies that have the potential to end up as IBD 100 companies but I want to find them before the masses and institutional investors do since that’s when the big money can be made.
Most of the big action seems to come from sub-$1 stocks breaking out from trading a few tens of thousands of dollars per day into the hundreds of thousands of dollars a day range.
An example filter I’ve been running to screen for candidates is:
Not intended to find short term scalps or swing trades. Most of the hits from this and the other filters I use are usually not worth buying; you have to weed through them to find the good ones. I look for stocks breaking out from a well formed base or those that look like they’re in consolidation from a pullback and ready to move higher. OBV that is headed straight up or several days of daily volume or several weeks of weekly volume that are well above average are also good signs. I don't chase anything that has already run up too far.
If I see an interesting chart, I use Yahoo Finance to take a look at what the company does, check the company’s website to see what info they offer, what patents or proprietary technologies they have, their management credentials, their business model, and if they have any revenue or are poised to increase their revenue or profit significantly. I may look at the latest 10Q or 10K too.
If I find a promising candidate, I check the discussion board at iHUB and see what the buzz is there. If there are too many people tracking it on iHUB, I usually pass on it since that usually means it’s over traded and not “undiscovered”. If everything looks good and I think the company is poised for significant revenue or profit growth and their patents, IP, etc look compelling, I may take an entry position and see how it plays out. If things progress positively, I may scale in for a larger position.
It takes a lot of work to weed through all of the dogs to find good companies worth holding for any length of time. Also, the liquidity can be very low, especially before the stock makes any sort of big move, and of course, you can lose money on the trade. Still, I enjoy finding out about some of these companies and, when and if it happens, it’s a lot of fun to see something you buy go up a few hundred percent. It does good things to your account too.
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