Sunday, March 18, 2007

Finding Winners On A Down Day

This is a chart of the S&P500 ending last Friday. The daily pivot number for today is 1389.36, and the three day pivot is 1382.81. Currently the futures are up 6.8 overnight, but it is still early. With the weakness and the concern in the housing market, any data that comes out to show things there are worse than expected, might give cause for more concern. Tuesday is a big day for some housing economic numbers, here is a link to the economic calendar found on Yahoo,

Last Friday was option expiration, so there could be some relief to the upside for the short term, but those couple big down days we have had recently, should not be forgotten.

Using a computer to scan market data is becoming easier and easier. Even people without programming expertise can write some simple scans to filter out some interesting stocks and chart patterns. These scans can be made simple or complex. In the examples here, the results are from a scan used to look for stocks that are positive for the day on increasing volume. This scan does not take into account fundamental data, just the price action and volume for the day compared to its past performance.

C > C1 AND V > V1 AND C > 5 AND V > 1000 AND V > XAVGV8 * 1.25

1. C>C1=close today has to be greater than the close yesterday.
2. V>V1=volume today has to be greater than the volume yesterday.
3. C>5=limits are universe to stocks greater than $5.
4. V>1000=volume has to be greater than 100k shares.
5. V>XAVGV8*1.25=volume has to be greater than the average volume by 25%.

Two stocks that showed up are related by the fact that they deal with the manufacture of carbon fiber. This is a sector that is growing because of the demands for greater fuel efficiency in transportation(Boeing), and in the demand for more high performance materials in the defense sector. Carbon fiber is an area that should be looked at as a sector that is ripe for growth and consolidation. Greater days ahead as demand increases.

Zoltek Companies, Inc., through its wholly owned subsidiaries, engages in the development, manufacture, and marketing of carbon fibers for various applications. Its carbon fibers are used as the primary building material in commercial products. The company also manufactures and sells filament winding and pultrusion equipment used in the production of composite parts. In addition, the company produces oxidized acrylic fiber for flame and heat resistant applications; and technical fibers, which are used to manufacture aircraft brake pads and other friction applications. It has operations primarily in the United States and Europe and sells its carbon fibers worldwide.

Hexcel Corporation, together with its subsidiaries, engages in the development, manufacture, and marketing of advanced structural materials in the United States, Europe, and internationally. It operates in three segments: Composites, Reinforcements, and Structures. The Composites segment offers carbon fibers; prepregs; structural adhesives; honeycomb, parts, and composite panels; fiber reinforced thermoplastics; molding compounds; and polyurethane systems, gel coats, and laminates. The Reinforcements segment manufactures and markets industrial fabrics and other specialty reinforcement products. The Structures segment produces composite structures, such as aerodynamic fairings, wing panels, and other aircraft components. Its products are applied in commercial and military aircraft, space launch vehicles and satellites, body armor, wind turbine blades, printed wiring boards, high-speed trains and ferries, cars and trucks, window blinds, bikes, skis, and various other recreational equipments. Hexcel Corporation serves commercial aerospace, industrial, space and defense, and electronics industries.

These are just a couple carbon fiber stocks, CYT, GTI and, SGG are others to look at, if interested. Writing simple programs to scan market data for certain criteria can be as simple or as difficult as you make it. If you are an investor who just likes to follow your holdings and occasionally look for new ideas, you can have the computer do a lot of the work for you. If you are trader that is looking for ideas every day or even multiple times a day, have a computer scanning the market is like having your own assistant. One simple service available is Telechart, They offer an 30day free trial. You have to write your own filters and scans, but it is well worth learning, and there are many resources on the web to help. Telechart is not the only one out there, but its a great place to start.

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