Let’s Talk Strategy…

As all of you know, over this long weekend I’ve been making adjustments to the way I trade. This time around I cannot take much credit, for this adjustment was brought to me by two fantastic traders that know a ton about the market and how it rolls. Leigh Jones (@copperstl) and Jason Weaving (@jweaving) were the two masterminds behind the new strategy I have chosen to take with this hectic market, and I thank them for helping me thus far.

The strategy is based around momentum-driven, small cap stocks below $10. Finding tickers like this by yourself is difficult, so in order to find them, I used FINVIZ.com screens.

As seen in the screen below, the screen limits used are Price, Average Volume, and Volatility:

http://www.finviz.com/screener.ashx?v=111&f=sec_basicmaterials,sh_avgvol_o1000,sh_price_1to10,ta_volatility_mo5&ft=4&o=-volume

This is an actual screen I used to find Basic Materials/Energy sector stocks. From this list, I then chose 25 of the best technical patterns from the 37 tickers available. I’ve also used this setup for the Industrial Goods sector and the Technology sector for this coming week. By the time I’m finished developing this strategy, I will have a watch list for each sector. For now, however, I’ll be using these three sectors in order to see if the strategy works based off of the way I trade and the way I asset manage.

The watch lists for this week are as follows:

Basic Materials/Energy, Indu. Goods, and Tech Sector Watch Lists
With the new trading strategy, I’ve also instituted a new set up for the way I trade earnings. I’ve taken the tickers that report earnings in the three watch lists above and have incorporated them into my earnings strategy, thus creating a double the money scenario that I can trade earnings off of - $10 and under stocks with high volatility, momentum swings, and an average volume over 1M that can now work as a ticker to trade and a ticker to swing into earnings with. This means that I will be working with fundamental information with the grouping that reports earnings this week in order to land some big earnings swing trades.

The list of tickers that report are seen in the Q2 Earnings Swing Trade spreadsheet below:
http://spreadsheets.google.com/pub?key=t8DVeLsnVgr6lllvI58EsKg&output=html

That’s all for the strategy talk! This week’s Economic Data is seen in the link below:
http://mam.econoday.com/byweek.asp?cust=mam

Without question, the two biggest things that come out this week are Durable Goods Orders on Wednesday and GDP on Friday. Both of these things will be able to determine the direction this market goes in the next couple of weeks, thus predicting the outcome of how the rest of this earnings season will go. I will look further into these two statistics come Monday, Tuesday, and Thursday.

I hope everyone had a lot of time to reflect and enjoy the week that was. I personally don’t feel that this rally can continue like it did last week for much longer without a substantial pullback, so keep your head on a swivel and watch where your market indicators guide you. See all of you during PreMarket soon!

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