I am currently looking to invest in an Intermediate Term setting that William J Oneil lays out in his books. I subscribe to his online paper and IBD dailygraphs for sectors analysis. A lot of the stocks that are featured in the online paper are at the handle part instead of the cup. I would prefer to enter the stock before the handle and need a list of stocks in the cup formation. One thought was to look at IBD industry groups 3 month rank compared to the current rank. Essentially, a big drop off in rank from 3 months ago might signal a pullback which is where I would find the cup formation. Another thought was to just take the thursday top200 stock list and eyeball it for stocks in short or lateral ITs. I am looking for a 2 month cycle of about 20%. That would be shooting par. If anybody has a good way to filter for cups or any other suggestions, it would be appreciated.
This is very old info that I am posting. Before y2k Worden bros had and maintained TC2000 Version 3.0 Using that, it was possible to detect WJO's impending cup and handles in advance of their detection and selection by the IBD team. As an example, at one presentation (invitation only workshop) where IBD folk announced a new list of 8 during a workshop, they asked about who had an interest in any of those on the list. I owned 5 of the 8 at that time. When Y2K occurred and Worden no longer supported Ver 3.0, I had to drop Worden Bros stuff because their new stuff did not cover the bases any longer. The stuff you currently use can be used to front run the cup and handle. So can the old equations (the two DU equations) on the ver 3.0 if you have a data source to apply them to. The general technique that you need to deploy just involves the detection of the bottom of the cup in a universe of high quality stocks. And, for further sorting, you can add into the mix the detection of a "phase change" which is WJO's name for how a corp moves from one level of existance into a more actively traded existence as a consequence of public activity that increases the volume of trading to a new level. All of the above will net you runs that are doubling quarterly and last quite long as well. Your pace can be over 1,000% a year (which is above your 640 par) and there are abundant stocks that BO one after another; there is no bunching problem and they are independant of the economic climate. Maybe this thread can develop further, detail wise. I am bad at guessing how much detail is being requested and usually the most things get side tracked fairly fast. Generally speaking the IT sets the fundamental pace for making money and using QA to get to the focus on universes gives the second leg. After that, and within the IT, optimizing banking capital is where timing and effort come into play. You do not request to work inside of the IT, I see. The basic topic seems to be filtering and that stuff is mostly just writing up the maths. You have those by reference. Doing filtering is straight forward. I guess the main hitch for getting it done is the difficulty in getting across the WHY and HOW part. You have, very nicely, gotten on point for the WHY part.
Thankyou for the helpful reply. As I am still at the first step of getting the list of possible BOs, I have yet to go through the process of dealing with the more pressing Qs. I hope optimizing with timing within the IT is going to enter the process sometime soon. My initial thought process is to exit on the full traverse after the first real pt 3 and then rotate it into another stock breaking out eventhough the IT run may not be over. Thats my initial process of how I would go about optimizing the IT cycle. I am not too sure though. I am currently a little stuck on deciphering the difference between a natural cycle top at the left IT channel and when price breaks the IT left channel line for an increase of pace. I am sure it will eventually present itself. thanks again
I think that the difference is in the volume : high volume => the move continues. Also, you could get a hint from a higher time frame channel and resistance / support zones.
lol. I was maybe thinking of zooming in one more fractal pair set to see what was going on. on another note, I thought one could position trade the carrier of the IT and then add and delete positions within the natural cycle moves. Personally, I dont think I have all the sequences down to succesfully trade each natural cycle top and bottom yet. I am looking forward to this type of trading when I do acquire the necessary knowledge, skills, and experiences.
You zoom in to get a better entry / exit, but the end of the channel is usually determined by reaching a higher fractal's channel line or formation. An easier and better strategy is to concentrate in extracting the middle of the move, that has a higher velocity, then jump to another stock and do the same thing. Around the tops and the bottoms, the money/time ratio is smaller. Obviously this doesn't work if you trade only one market.
At some point for liquidity issues, you will need to park your money in the ITs. You are referring to the natural cycle of trading which I would like to incorporate in this thread WITH the IT. I would like to focus on getting a core position in ITs and use the natural cycle to eek out more profits. Sort of like AMT or MacroEvent trading the ES and zoning capital. This probably will not spur much attention as it is a somewhat later process down the road.
Most stocks feature in IBD are small caps, and most of them have average verage of 150k or less. If you don't mind having a wide bid-ask and you don't mind run away stop, then buy these stocks. The reward is big, but so as the risk. I was one of his following when I first begin investing/trading. I remembered I set my stop at 19, which is about 10% from my entry price, and since the stock is thin, I didn't get filled until it hit 18. He make you too depend on his paper and his other service. Some people said it worth. I personally think it doesn't, because the paper is badly written. A high schooler write better than his editors.
I am going to filter to make sure the stocks have liquidity before entering. I definately do not want to run into that problem. It would be great If you would let me know where were you buying in terms of the cup and handle? Maybe I will have to be a bit looser than the 10%. I also really do not read the paper. I use the paper for ranks and stock universes. Here are the stocks I highlighted in last thursdays top200 group. CRDN NWRE TKC APPL HELX TXN SPIL TRAD There werent to many....
You can get most of these informations and more from prophet.net. Just use it's industry ranking and filter out those thin stocks, you will have a much better list. And it's free.