I've been using MSN's StockScouter along with their guided research to do some paper trades. I've started paper trading puts on stocks that are rated a 3 or lower and have poor technical and valuation grades. I only started doing this on Monday so I'm curious if you guys have had any success using these tools in the past. I've also started paper trading calls on stocks with a 9 or 10 rating so we'll see how that goes. Opinions?
A friend of mine and I have been using scouter to find opportunities for longs. We only take those rated 9 and 10 and have PE ratios of < 15. Stock Scouter produces a much bigger list of high rated stocks than dogs, though. Aren't there better ways to find optionable poor performers than that?
Thats another thing, I printed out a screen from their deluxe screener last night and it allowed me to find 200 stocks that were rated 3 or lower with technical and valuation grades as low as possible. I can't remember exactly where to find it but if you do a quick "power search" I think it will give you the option of customizing it in their deluxe screener. That way you can find the worst stocks if you choose to do so. I just wonder how reliable these ratings are. The charts for the stocks rated 10 are VERY bullish with very little volatility but I just wonder how predictable these ratings are. I would assume that a stock rated 10 will produce positive results 7 out of 10 trades or better on long positions but I haven't been watching it long enough to tell. I would think the same goes for stocks rated 1 on short positions.
Here is a list of the optionable stocks from that "poor rating" list I printed out: CHTR - 1 NAVR - 1 EK - 2 MALL - 2 but with very little or no open interest RRI - 2 ARRS - 3 ARXT - 3 but with very little or no open interest AXL - 3 BBA - 3 CSK - 3 DV - 3 FFH - 3 FLE - 3 MNC - 3 TXRH - 3 BIOS - 2 DBD - 2 FLWS - 2 MXO - 2 OI - 2 ARRO - 3 BBI - 3 BVN - 3 GFIG - 3 GNTX - 3 JAS - 3 KSU - 3 MESA - 3 NCX - 3 SBL - 3 SKS - 3 UEPS - 3 WMB - 3 SFP - 1 WPSC - 2 ANN - 3 CHK - 3 DKS - 3 EAGL - 3 JLG - 3 LAF - 3 OMX - 3 SGR - 3 THC - 3 UIS - 3 SPC - 2 ABY - 3 LCC - 3 RVI - 3 AVII - 1 BIVN - 1 MOVI - 1 ABP - 2 DNDN - 2 GB - 2 GGC - 2 INHX - 2 NEOL - 2 ONXX - 2 RGS - 2 LF - 3 YRCW - 3
There is no harm in trying anything, but if you want results understand how the ranking is derived, how it is supposed to be used. It is not for options, it is supposed to be used more as buying all 50 stocks and then rebalancing with new additions. Options as instrument work very differently and you need strategies on options which take in to account those facts.
Thanks, I'm definitely looking into it. I'm not really placing paper trades solely on the scouter rating, but also on how it is doing in its sector, what the technicals are saying, earnings history, insider buying/selling, good or bad news, etc. I'm just using the scouter rating as an additional tool.
"You do not need to run a 50-stock portfolio with monthly rebalances to take advantage of the StockScouter system. If you fancy yourself an investor in large-cap stocks, use the StockScouter feature found in MSN Moneyâs Screener or on the Market Trends page to only find high-rated large-caps. If you prefer stocks favored by corporate insiders, then use the Screener to find high-rated stocks with Ownership grades of A. If you prefer value stocks, then use the Screener or Market Trends page to find only high-rated value stocks. If you are interested in shorting stocks, then find stocks rated 1 with low Technical or Valuation grades. And so on." That is the quote from the stockscouter information page. I think that along with other tools, it can be a helpful tool to find badly performing stocks, based on what that paragraph says.