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  • PatternDNA Long & Short Update from April 15th
    Eight stocks were given the PatternDNA treatement. These were American International Group (NYSE:AIG), Nokia Corporation (NYSE:NOK), Eastman Kodak (EK), PulteGroup, Inc (NYSE:PHM), Weyerhaeuser Company (NYSE:WY), Cree Inc (NASDAQ:CREE), Tellabs, Inc (NASDAQ:TLAB), Office Depot, Inc (NASDAQ:ODP). 

    The initial projection for these stocks going into the week was for a quiet first two days, building to an 58% probability for a higher close by day five (five of the eight stocks held a 60% or more probability for a higher close). Unfortunately, the bullish optimism didn't pan out, with four stocks finishing lower and four finishing higher by the close of trade on day 5. 

    Best of the stock was Tellabs (TLAB). It closed the five day period up 6.0% - although yesterday's losses on earnings took all of these gains away and then some. 

    Worst hit was American International Group (AIG) which finished down -4.7%. It was closely followed by Cree Inc (CREE) which finished down -4.0%. Both of these stocks had offered probailities greater than 60% for a higher close by day 5. 

    PatternDNA scored four out of four for day 1 where the probability for a higher or lower close was 60% or more, but only correctly projected one out of five for day 5. 

    A mixed performance from these 8 stocks. 

    Apr 27 8:32 AM | Link | Comment!
  • Active Screen - CANSLIM: April 27th
    There were a couple of changes to the top-8 constituents this week. Dropped were Intuitive Surgical (NASDAQ:ISRG) and Free McMoran (NYSE:FCX), returning were Netflix (NASDAQ:NFLX) and F5 Networks (NASDAQ:FFIV). The complete list is as follows: Apple (NASDAQ:AAPL), Vale S.A. (NYSE:VALE), Barrick Gold (NYSE:ABX), Baidu (NASDAQ:BIDU), Research in Motion (RIMM), Cognizant Technlogy (NASDAQ:CTSH), Netflix (NFLX), and F5 Networks (FFIV). The Screener setup was as follows:

    Apple (AAPL) pushed a rally off head-and-shoulder neckline support, but it hasn't yet negated the bearish pattern. To do this, a rally past $363 (preferably on volume) is required. Strong earnings gives bulls the impetus to do this.

    Zignals Chart Image

    Vale S.A. (VALE) is still under the influence of its bearish head-and-shoulder pattern. An intraday reversal yesterday took the index away from resistance defined by the right-hand-shoulder high at $34.60. It's lingering close to its 50-day MA and looking vulnerable to another push lower. 

    Zignals Chart Image

    Barrick Gold (ABX) is caught in a 50:50 make or break. The original break of $54 was undone by resistance at $55.50. This led to a rapid, heavy volume sell off back to triangle support. However, in doing so it took out its 50-day MA. Buyers will look to support as an opportunity, but the volume and rate of decline suggest there will be few takers if the stock drove through its 200-day MA.

    Zignals Chart Image  
    Baidu (BIDU) was little changed on the last update. The rally continues its steady advance, going from $146 to $152.

    Research in Motion (RIMM) has found a bid around $53.30, but there is work to do to regain its 200-day MA at $56.41. The large breakdown gap from late March (@$62.79) remains the dominating influence.

    Cognizant Technology (CTSH) pulled away from its 50-day MA as part of a broad advance.  It is currently negotiating $82.75 resistance which if successful will mean a new multi-year high for the stock. Bullish.

    Netflix (NFLX) returned to the top-8 after a brief absence. Tuesday saw the stock drop towards its 50-day MA which has held as support in the past. Selling volume was heavy so there may be sufficient impetus to drive it lower. However, the 50-day MA has been key support in this multi-year rally so shouldn't be discounted easily. 

    Zignals Chart Image

    Finally, F5 Networks (FFIV) makes a less than stellar return to this list. While the stock qualifies on a fundamental basis, its price is caught beneath 50-day and 200-day MAs. The stock gapped down big in January and has struggled to make any headway against the overhead supply generated by the selloff. One to watch for improvement, but it could be a while before it does. 

    Zignals Chart Image
    Apr 27 7:06 AM | Link | Comment!
  • PatternDNA Pattern of the Week: GGFGB
    This week's pattern was drawn from Nokia (NYSE:NOK). It featured four bearish days followed by a bullish day.

    What was unusual about this pattern was the poor short term performance, offset by a stronger long term performance.

    Match No. of Patterns
    % Win
    % Win
    % Win
    Average Return
    Per Trade (> 5 day)
    Weakest 183 50 54 56 5.1
    Weak 137 52 52 58 6.1
    Neutral 69 46 43 49 6.6
    Strong 24 51 42 33 5.5
    Strongest 0 n/a n/a n/a n/a

    Given the coin-toss probabilities over the 5-day outlook, bar the 67% probability for a lower close on the fifth day on the Strong Match, it's not a pattern to generate short term interest.

    However, when the Average Return Per Trade was considered (Average Return Per Trade assumes an initial stop of 10%, raised to 5% off the price reached on a 15% gain. Ultimate Profit Target of 25%) the performance of the pattern improved. The win percentage of the pattern when applied with the aforementioned risk strategy, ranged from 58% at the Strongest match to 65% at the Neutral match. The latter match also having the Average Return Per Trade.

    Using the Neutral match and running a market scan returned 61 matches. One such match was for Marshall and Ilsley (NYSE:MI).

    Zignals Chart Image

    With the stock trading above its 50-day MA and 200-day MA (and the 50-day MA riding above its 200-day MA) there is good reason for Marshall and Ilsley to be one of the 65% to close in profit (and if it is, the average return from winning trades is 13.4%).

    Tags: MI, NOK
    Apr 18 11:34 AM | Link | Comment!
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