A Hybrid Equity Selector
Unites fundamental and technical factors
- Screen relevant stocks and indices
The first stage is to decide the allocation of investment funds along the
following: Large, Small , or Mid Cap, Industry specific, country specific.
These can be stocks, mutual funds, or ETFs.
For instance large caps could be selected from Dow Jones 30, S&P 500,
Russell 1000, NASDAQ 100, S&P 500.
Another example might be second tier selections among the S&P 400 MIDCAP,
S&P 600, and Russell 2000 SMALL CAP.
allocations could be easily determined by reviewing industry buy and sell
correlation - STRATEGIC
ALLOCATIONS, ETF Sector series, and ULTRA SECTOR PROFUNDS
Country specific allocation can be directed by viewing Teknalysis Level
1 - MSCI ishares Worldwide.
Defensive posture - using equities to take advantage of stock market
downtrends by buying Fixed Treasury iShares and Rydex mutual funds that sell
short, ETF Trades- LONG and ETF Trades- SHORT
- Select and Vet
Once a stock becomes a prospect for purchase or sale it should be reviewed in
the Yahoo Lookup to verify the companies business profile, status, its
relative industry strength and names of the majority shareholders.
In addition the following can be applied:
IBD - CANSLIM criteria/Smart
Select & 85/85.
Value Line rating (Be very leery of stock brokerage recommendations.)
For mutual funds past performance - See IBD (Investment Business Daily)
Mutual fund ratings A to E based on a 3 year record and the current year to
date, monthly and quarterly numerical percentages.
- Time purchases and sales
A stock with a solid business plan is affected by the following:
Insider buying and selling
Corporate stock purchases for treasury stock, 401K plan and other
Merger and acquisitions
a) acquiring firm stock usually falls.
b) Firm stock being bought out usually rises.
Institutional buying and selling bank trusts - Mutual funds
Relative industry strength.
The collective results of the above are factored in the stock charts of
Teknalysis - The law of supply and demand of any stock determine its
- Utilize Teknalysis
The stock indices of Level 1 and Level 2 are labeled -
Sell/Watch; Buy Alert; Buy/Hold; and Sell/Alert. For maximum results while
minimizing downside risks, one should generally buy only when the stock is
oversold and sell only when the stock is overbought. The stock symbol is
moved from column to column as follows:
BUY ALERT - Stock symbol in black print is temporarily placed herein from the
Sell/Watch column. When it meets most buy indicators a new buy addition
to the index will be added in blue print. Once subsequently verified
stocks are moved in green print to the bottom of the Buy/Hold column for the
one day only. If the stock is not subsequently verified as Buy/Hold its
symbol is returned in red print for one day only to the top of the Sell/Watch
BUY/HOLD - Stock symbols in this column come from the Buy/Alert column and
placed at the bottom or from the unverified Sell/Alert column placed at the
top. The new entries to this column at the top or at the bottom are
initially in green color.
SELL/ALERT - Those stock symbols in the Buy/Hold category that meet most sell
indicators are moved in black print to the Sell/Alert column. New sell
additions to this index are added in blue print to this column. A
subsequently verified sell symbol is moved temporarily in red print to the
bottom of the Sell/Watch column. A subsequent unverified sell symbol is
moved in green print temporarily to the top of the Buy/Hold column.
SELL/WATCH - Those symbols of the recently verified are held in this column
for close monitoring as potential buy alerts. On a recent basis, those new
sells are added at the bottom in red and those unverified buy alerts are
returned in red print at the top.
patience without financial outlay.
- Color Code:
RED Symbols in SELL/WATCH indicate
GREEN Symbols in BUY/HOLD indicate
(1) an unconfirmed BUY ALERT (top) or
an unconfirmed SELL ALERT (top) or
(2) a confirmed SELL ALERT (bottom)
(2) a confirmed BUY ALERT (bottom)
BLUE Symbols of NEW ADDITIONS usually
on top of BUY OR SELL ALERT columns.
- Money Flow Index (MFI) is a momentum indicator that measures
the strength of money flowing in and out of a security. It is related to the Relative Strength Index (RSI) but whereas
the RSI incorporates only prices, the Money Flow Index accounts for volume. Money Flow Index is interpreted as
the following: Look for divergence between the indicator and the price action. If the price trends higher
and the MFI trends lower (or visa versa), a reversal may be imminent. Look for market tops to occur when the MFI
is above 80. Look for market bottoms to occur when the MFI is below 20.
- Relative Strength Indicator (RSI) is a popular
oscillator. The name is slightly misleading, as the RSI does not compare the relative strength of two securities
but rather the internal strength of a single security. A more appropriate name might be "Internal
- MACD (Moving Average Convergence/Divergence) is a
trend-following momentum indicator that shows the relationship between two moving averages of prices. The
MACD is the difference between a 26-day and a 12-day exponential moving average. A 9-day exponential
moving a average , called the "signal" (or "trigger" line) is is plotted on top of the MACD to
show buy/sell opportunities. The MACD proves most effective in wide-swinging trading markets. There
are three popular ways to use the MACD : crossovers, overbought/oversold conditions and divergences.
- RMO Trade Model
consists of 4 key modules:
1. The RMO detects the primary trend of
the instrument's trading value.
2. Swing Trader (Indicators & Expert) detects
each swing within a trend and automatically places red (Sell) or
blue (Buy) arrows on the price chart at these points.
3. Sentiment Detector colors the OHLC chart bars
red (bearish) or blue (bullish) indicating the prevailing
4. Exit Swing Indicator is used only when
registering a profitable trade as a trailing stop loss and works well as an
TEKnalysis relies mainly on large
reputable organizations for information, advice and tools. These are:
Poor's (S & P), NYSE, ASE, NASDAQ
Investor Business Daily (IBD),
Wall Street Journal,
VectorVest, Thomson/Reuters, MetaStock
Battle for Investment
Survival by Gerald Loeb
Moore, Johnson and Kippola
Technical Analysis from A to Z
by Steven Achelis
Investor by Benjamin Graham
How to Make Money in Stocks by William J. O'Neil
How to Select Stocks
Using Technical Analysis by Martin J. Spring
Investor's Business Daily and the Making of
Millionaires by David Saito-Chung
Beating the Streets
by Peter Lynch and John Rothchild
Power Investing With
Sector Funds: Mutual Fund Timing & Allocation Strategies
by Peter W.
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