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My New Favorite Scan - Excellent Results Using SCTR and Rising PMO

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If you watch MarketWatchers LIVE regularly, you've probably heard about my new scan. I've found, especially when the market has a bearish bias, that my original Price Momentum Oscillator (PMO) scan wasn't producing any results. I consider this a caution flag before I get too involved with the results of my new scan.



The original scan is below. Its requirements are quite high, so I won't get results in a bearish market; not only do I need a PMO on a rising trend, but the EMAs need to be configured bullishly. After the market takes a serious hit, there aren't that many stocks that will work with the scan. It is great for intermediate-term trades, though, as resulting stocks are on already on the right track.


// Narrows down the universe to stocks with decent volume and from the US
[type = stock] AND [Daily SMA(20,Daily Volume) > 100000]
AND [country is US]

// Keeps the penny stocks and high volatility stocks out of your results
AND [Close > 10]

// This identifies a PMO that hasn't yet had a positive crossover its signal line
AND[today's PMO Line(35,20,10) < today's PMO Signal(35,20,10)]

// This identifies a PMO rising for three days
AND [today's PMO Line(35,20,10) > yesterday's PMO Line(35,20,10)]
AND [yesterday's PMO Line(35,20,10) > 2 days ago PMO Line(35,20,10)] 
AND [2 days ago PMO Line(35,20,10) > 3 days ago PMO Line(35,20,10)]

//This ensures we get a positive IT and LT Trend Model configuration
AND [today's ema(20,close) > today's ema(50,close)]
AND [today's ema(50,close) > today's ema(200,close)]

//This identifies stocks with SCTRs greater than 75 or in the "hot zone"
AND [SCTR > 75]


MarketWatchers LIVE is centered mainly on the short term. I need a scan that would give me good results for short-term investments; I think this scan serves that purpose pretty well.


[type = stock] AND [Daily SMA(20,Daily Volume) > 100000]
AND [country is US]

// Keeps the penny stocks and high volatility stocks out of your results
AND [Close > 10]

AND [today's PMO Line(35,20,10) > yesterday's PMO Line(35,20,10)]
AND [yesterday's PMO Line(35,20,10) > 2 days ago PMO Line(35,20,10)]
AND [2 days ago PMO Line(35,20,10) > 3 days ago PMO Line(35,20,10)]

AND [today's ema(20,close) > today's ema(50,close)]
AND [today's ema(50,close) > today's ema(200,close)]

AND [SCTR < 80]
AND [SCTR > 70]


The scan above doesn't require the PMO to be beneath its signal line. Additionally, it allows the SCTR to be potentially as low as 70, rather than 75. I really have been surprised by the results that return with just that little amount of tweaking. If this still isn't opening you up to enough results, I recommend that you go ahead and "comment out" some of the criteria. For example, I will sometimes let the PMO rise for 2 days (or even just for the day). Unfortunately, the hard work comes afterwards when it's time to analyze the results. 

Here is part of a CandleGlance containing some of today's results.

To start with, I look for breakouts from resistance or declining trends accompanied by a good-looking PMO (one that is moving upward, not sideways or twitching). I then follow that with looking at any chart patterns that reveal themselves. 

Looking at the results above, my interest lies with AEE and CMS (a breakout from a possible flag and challenging highs). It's just a small thumbnail, though, so I have to look at the charts. I've annotated both below. Of the two, CMS is more promising, despite a very similar price chart. My reasoning is that CMS has already broken above its March top while AEE hasn't.

Hopefully you found this exercise helpful. I hope you find my new scan to your liking. Enjoy!


Watch the latest episode of DecisionPoint with Carl & Erin Swenlin LIVE on Fridays 4:30p EST or on the StockCharts TV YouTube channel here!


Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Erin

erinh@stockcharts.com


Helpful DecisionPoint Links:

Erin's PMO Scan

DecisionPoint Shared ChartList and DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking


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Erin Swenlin
About the author: helped create and manage the DecisionPoint.com website alongside her father, Carl Swenlin. Together, Erin and Carl launched the DecisionPoint daily blog in 2009. She hosts the MarketWatchers LIVE web show at StockCharts.com, and is also a Member of the CMT Association. Learn More
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