Published June 1, 1998 in the Daily Worden Report—
Have you ever noticed that frequently, when you get something new, you wind up putting it to a different use than you had intended? For example, I bought an L. L. Bean "cargo vest" for walking my dogs in the woods. It has twelve large pockets that I can use to hold all of the paraphernalia that I carry around in my admittedly eccentric way – like two dog leashes, a Walkman with ear phones, a few spare audio book cassettes, a camera, a notebook, a checkbook, and, of all things, my computer glasses. Since I acquired this air-cooled khaki miracle, I find that I wear it not just on my morning walk but all day long. It's part of my weekday uniform.
Of all the pockets at my disposal, I have one favorite. It is the one I thought I would never use. The top, right breast pocket is a special, softly lined pocket for sunglasses. I never wear sunglasses. But I found computer glasses fit into this pocket every bit as well as sunglasses. Since this discovery, I have never misplaced either my computer glasses or my regular glasses. Not even once. This has given me an inner peace of mind I never before enjoyed.
As you use TeleChart, you may find yourself experiencing similar revelations of spirit and mind. It actually converts your computer into a technician's workstation. If you give it half a chance, you'll find yourself becoming more organized. I have previously written about the organizational power of keeping notes. Now let's consider the scans.
Don't make the mistake of believing that the scans will do your thinking for you. They can't do that any more than the charts themselves can. What they can do is help you organize yourself and pave the way for better decisions. I think of scans this way. They cut down the necessity of looking at so many charts. For example, if I click on "All Stocks," my WatchList is going to consist of 9551 items. That, I'm sure you will agree, is one heck of a lot of charts to look at. My thumb would get sore punching the space bar 9551 times.
Of course, there are other ready made lists to select – like the Standard & Poor's 500, or the Dow Jones Industrials. Nobody needs to worry about blistering his thumb just to look at 30 stocks. And sometimes, that solves your problem. You may wish to look at those 30 blue chips and only them.
More often, though, you'll want a broader selection, comprising a more diverse array, or perhaps a more specific array of stocks. I personally prefer working with stocks priced above $10. I could start there.
I click on the lightning bolt icon on the tool bar, then on the "Create New" button. This brings up a box called "Editing Conditions for New Scan." I still haven't pressed a key! On the drop-down menu at the bottom, "WatchList to Scan," I click on "All Stocks."
I click (Add New Condition) and scan down the list until I find "Price per Share-H." I highlight it and click. I select "Value" as the Condition Type, then nudge the blue ribbon in the "Range Selector" upward until I get something close to $10. The closest I can come is $10.13. Good enough. That will rank at the 38th percentile, meaning 62 percent of all stocks will fall into my chosen category of $10.13 or above. I click OK and find that this will bring the list I am building down to 5923 stocks.
I want to narrow my "working list" still further. 5923 is too many charts to look at. What next?
I'm interested in good-sized companies. Should I now add a condition limiting capitalization to, say, the larger half. That is, those stocks ranking above the 50th percentile in market value. I could. But I reject it on the grounds that there are many stocks of highly capitalized companies I don't want to waste my time looking at. Utilities, for example, tend to have large capitalizations. Of course, I could probably eliminate most of them by limiting "Volatility" or "Beta."
But I think I know a simpler way. It's good enough to satisfy me, though not necessarily you. Your scans must reflect your own ideas about what is most important. But I decide that stocks that trade a lot of shares will accomplish what I'm looking for. I scan my criteria list for "Volume 90-Day." I could choose "Volume (dollars) 90-Day" and get almost the same results, but that would tend to emphasize higher priced stocks, and my $10.13 minimum takes care of eliminating very low priced stocks. It's probably six of one and half a dozen of the other, and I'm not by temperament a hair splitter.
I double click on "Volume 90-day" and it appears above as the second condition. This time I click on "Market Rank" and nudge the blue ribbon up to the 50th percentile. I find I'm now down to a little over 3000 stocks. A bit too many? Not necessarily, but I decide to cut it down even more. I close the count box and turn my attention once again to the blue ribbon. I nudge it all the way up to 75. This means I will be accepting only those stocks that rank in the top 25 percent for volume of trading. Now I'm down to 1673.
Voila! So much for that. I now have a list of 1673 stocks that fit the general structure I'm interested in. Active stocks over $10. This doesn't mean that there aren't other stocks that could interest me, stocks that didn't make it through the cracks of my conditions. Who cares? I should be able to find plenty of stocks in my list of 1673.
But who wants to look at 1673 stocks, you are probably saying. Shouldn't we narrow the list still further? We could, but I choose not to. You see, I'm not going to look at all of these charts. I still have something left in my bag of tricks. I click on the "Save As" button and name my list "Price 10+ & 75 percentile vol." I close the "EasyScan" box.
My new WatchList, "Price 10+ & 75 percentile vol," can now be found among the WatchLists. It will have a yellow lightning bolt beside it. I find it and click on it. The list will appear left of my charts.
Here's my last trick. I now get to select a "Sort." I decide to click on "Gappers-H." Although my list consists of 1622 stocks, I find that only 45 of them gapped to the upside today. I don't mind going through 45 charts. After all, that's what I am – a chart reader. And what's this? The very first chart I'm looking at is interesting. It's gapping off a bottom that was formed in the face of a positive TSV divergence.
I browse through all 45 charts, flagging interesting patterns by pressing the "F" key. This takes only a few minutes. I then click on the drop-down menu, "WatchList." I highlight "Copy to Other List" and click on "Flagged Symbols." I create a new list of just those charts I flagged, name it "Gappers – " add the date to the name. I now have another list, this one with a black bullet in front of it. I click on this and find that I have harvested 19 interesting stocks. I will now go through these 19 charts slowly, looking at them in varying time frames and with a variety of indicators. I'll check some fundamentals. Maybe look at some news items. The only thing I know is that I'm not interested in buying 19 stocks today. One or two – maybe.
Tomorrow I may sort my 1673 stocks differently. Maybe I'll sort them by their 5-year earnings growth rates and list them in descending order. Maybe I'll look only at those that rank in the 90th percentile or better in rate of growth for the past five years. If I do that, I just happen to know, I'll have only 77 charts to look at. And I'll bet there'll be some goodies in there. I guess I can find the time for that.
- Don Worden