John V.'s  Instablog

This week's results from my Super Stock Screener.  Screening is an excellent starting point for finding winning stocks.

My thoughts:  Wow, what an awful week in the market.  Everything sold off quite viciously as investors got out of many stocks after receiving bad news from almost every direction.

From a screening perspective the results this week matched the performance of the market as many stocks fell off the list.  I expected lots of stocks to drop off and indeed that is what happened as the number of stocks decreased from 53 to 46.  It would have been lower if not for the fact that 4 new stocks did show up.  This is the largest drop in quite a while and will probably shrink further if the market declines more.  The one benefit is that we do get a clearer picture of which stocks are truly strong and which ones are not.

To repeat what I said in prior weeks, the only stocks I view or consider buying at all are the ones that make the screening list.  All other stocks don't really exist to me and are off my radar.

Of the four new stocks, two of them are repeat visitors though honestly I don't really trust any of these four at all right now.  The two that have been on the screen before are Agilent Technologies (NYSE: A) and Cavium Networks (NASDAQ: CAVM), while the two brand new ones are Sapient Corporation (NASDAQ: SAPE) and Veeco Instruments (NASDAQ: VECO).  All four need to stick around for them to generate any kind of credibility, but if they do then they might have a positive future.

Notable stocks that fell off the screen included long-time names such as Acme Packet (NASDAQ: APKT), Riverbed Technology (NASDAQ: RVBD) and Mercado Libre (NASDAQ: MELI).  All were regarded as being stocks with high-potential, but falling off the screen means they still have more work to do before they become real leaders in the market.

In the future I will make a change in the screen by raising the Relative Strength requirement to 90 from the current 88 now.  The purpose of doing this is to make the screen list even more manageable and to further weed out the weaker stocks.  Thus we'll be able to really focus in on the strong names.

This change will be made next week and it will be interesting to see what the impact will be.  My techniques do resemble Charles Darwin's theory of 'Survival of the Fittest' in a manner of speaking, and I expect the stocks that remain to be the best and strongest ones out there.  If Darwin knew how applicable his theories were for finding stocks he might have given up science altogether.

The market is currently in a downtrend now and this will probably continue, so please be careful no matter what you do in the market.  Hopefully things stabilize and we all start making money again soon.

As always this is not a buy list but rather a starting point for doing more research.  Stocks that are new are underlined and have an Asterisk (*) next to their company name.

Stock that fell off the Super Stock Screener results from June 4th are below:

Note: This screen is fairly wide (EPS>=45%, Sales>=25%, ROE>=10, RS>=88, Price within 20% of High) and I do have tighter screens as well.  To keep the screen results manageable I removed Industry Groups that I either do not believe in (Financial) or are so Commodity that I have no idea how to pick one from another (Oil&Gas).