Trend Check with Tushar Chande

Simple Scan Code to Find Smoothly Trending Stocks with Chande Trend Meter

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Sometimes a stock takes on a life of its own, and trends smoothly for days on end.  All we can do is search for these stocks, and trade with care, since we do not know exactly how long they will continue to out-perform the market.  The Chande Trend Meter is a powerful tool for finding such stocks, and here is a simple scan code to look for such stocks.

 

Chart 1: MORN was at the top of the list for the scan code below.

 


 

The Scan Code

 

Chart 2: Simple scan code for CTM scan

This simple scan code, similar to the one in the SC documentation, uses a simple moving average of the Chande Trend Meter to rank stocks.  It does not impose any other conditions.  Naturally, you can change the length of the moving average to suit your trading horizon, and set your portfolio to the stocks or ETFs of your interest.


Scan Results

The results of the scan, shown below, have MORN at the top of the list.  A chart of MORN in shown in Chart 1, and looking at it, perhaps we can agree that it has moved very smoothly over the past several weeks.

 

Chart 3: Results for Chande Trend Meter scan.

 

Trading Strategies

Once you have a list, you can trade on a short-term or long-term basis using trend-following strategies with the usual caveats.  Naturally, you can wait for a pull back or analyze chart features to drive your trading as you wish.

 

Talk of Trade Wars Trips Industrials

Trade war talk has tripped up the Industrials from levels above 25,000 (see Chart 4 below).  Boeing and Caterpillar have borne the brunt of the selling.  Nobel laureate Paul Krugman has an excellent analysis of worst-case scenarios for GDP changes.  The effects are not negligible, but the emotional toll on traders seem to be greater than potential GDP declines.

 

Chart 4: The Dow 30 seem to have found support near the lower end of the band.  However, headlines have continued to set a negative tone for industrials, such as BA and CAT.

Tushar Chande
About the author: , PhD, MBA, is the inventor behind an impressive collection of technical indicators, including the Aroon and Stochastic RSI. He has written several books, holds both a PhD in Engineering and an MBA in Finance, and has over two decades of experience trading the financial markets. Follow Tushar in this blog as he highlights his new "Trend Meter" indicator and shares his analysis of current market conditions. Learn More
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