Buying the Bull

The following infographic by InvesTech Research (and sourced on The Big Picture) neatly shows the duration of all bull markets dating back to 1932.  The current bull market is running to form, having just surpassed the median length of a bull market. It's simple chart which takes the last swing low and projects forward in time; for example, the current bull market is timed from the March 2009 low.

What's interesting is how few bull markets fail inside a year.  It's a lot easier to trade a bull market if after a year the market has failed to take out the past year's low, suggesting something longer than just a relief bounce in a bear market. Only in 1932 and 1942 would you have been buying into a top had you waited a year after the low to buy. 

How would have fared had you bought a year after a low, and sold two years later (i.e. three years into a bull market), or three years later and four years later (when most bull markets typically end)? The table below highlights the returns based on available data (back to 1950).

The first obvious point to make is that a large portion of the potential return is lost in the first year of 'confirming' the bull market, but this cost-of-business is necessary to limit the risk of a bear "fake out".

The second point is the omission of the pre-1950 data, when bull market performance was at its weakest.  This would likely have had an adverse impact on the returns reported. 

Overall, returns were positive, with the best return coming from a holding period of 4 years after the purchase.  This offered an annualized return of 9%. Only in 1957, 1966 and 1970 were the returns sub-standard or negative.

Tailoring the entry a little more didn't bring an increase in Returns.  For example, buying the S&P when it was within 1% of its 200-day MA, but only after a year has passed from the bull market low, lowered the Annualized return. However, this form of entry is well suited to a Zignals Alert, which can notify of such opportunities (when the SPY is within 1% of its 200-day MA) as they occur. By setting an alert, the trader doesn't miss such opportunities as they arise, rather than attempting to trade an arbitary system, such as buying exactly 1 year after a bull market low.

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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too.

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What will the S&P offer in 2013?

Last March, the S&P was performing very strongly and traded at 1,416.  The 1-year S&P projection, based on historic matches of its relative position to 20-day, 50-day and 200-day MAs at this time was also very bullish.  It was a projecting a further +15% gain, with a +9% to +21% confidence interval.  A 15% gain would see the S&P around 1,628 this March. The low end 9% projection from the confidence interval offered an S&P at 1,543. As of January 4th, the S&P closed at 1,466.

In October of last year, the S&P missed the 6-month projection from March as the market trended lower. The S&P's relative position at that time was still net bullish, although it ultimately continued to decline through to November.  The October 6-month projection was more conservative, but still projected upside, with a target of 1,475 for March 2013, and 95% confidence range of 1,419-1,542.

There is still a couple of months to go before we get to these projection dates. As things stand, it is looking good for the S&P to hit the upper confidence level from October 2012/lower confidence level from March 2012 - at around the 1,540 mark. 

Currently, the S&P is 5.4% above its 200-day MA, 3.8% above its 50-day MA, and 2.5% above its 20-day MA.  This mildly bullish environment occurred frequently in the past; there were 32 prior occurrences of this match dating back to 1951.

The projection map based on the 32 data points is as follows:

Based on the close of the 4th January, by next year the S&P should be around 1,583, although there is a large degree of variance, particularly after 6 months.

However, this doesn't come without exceptions.  In 8 of the 32 matches (25%), the market was lower.  The worst case match was from October 1st 2007, when the market went on to lose 25% of its value the following year. Matches in 2003, 1972 and 1965 also led to falls of more than 10%. Of the outsize winners: 1954, 1958, 1995, and 1996 all saw gains above 30% in a year. In 1961, 1964, 1988, 1989, 2003, and 2006, gains for the next year were all above 10%.

Projections from the last fifty years appear to suggest bulls will maintain their edge into 2014. If proven true, it would put the cyclical bull market into its fifth year - a run which would be considered long in the tooth by most metrics. This might prove to be the last big gain, although there hasn't yet been a clear bearish projection since this analysis was started.

One can use Zignals Alerts to track the various price levels in the SPY.  A stop at 10% would protect against the worst of any downside.  While an alert to trigger on a 10% gain may be used as a cue to sell covered calls (?).

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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell it in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

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Acitve Stock Screening: October 9th

This screen was last run in August, but even during this short period there were a number of changes in qualifying stocks. Dropping from the top-8, as ranked by Market Cap, was CF Industries and Randgold Resources.  Vertex Pharmaceuticals jumped into sixth spot as Lululemon Athletica crept in to fill out the last spot

The Active Stock Screen used the following parameters:

• % Chg EPS; Q to last yr Q of 25% or more
• % Chg EPS; YTD to last YTD of 25% or more
• % Chg Revenue; YTD to last YTD of 25% or more
• Return on Average Equity of 17% or more
• 5-yr Revenue Growth Rate of 15% or more
• Market Cap of at least $50M
• Net Profit Margin of 18% or More
• Current price above $12
• Average 10-day volume above 250,000 shares

And it generated the following results:

While Baidu tops the list on fundamentals, on price it has been struggling. Technology stocks were hit hard over two days of heavy selling, as sectors dependent on strong economic conditions saw big outflows.  For Baidu, this has seen the stock drop sharply towards $100 support; $100 support was defended last October and July, and is a key psychological level, but it could struggle to hold for a third time given broader selling pressures. The stock has also struggled to make it back to resistance, with each successive swing high becoming lower and lower. Concerns around monetization of its mobile offerings are more of a long term issue, and analyst rating cuts only add to the panic. But the current sell is governed more by broader economic impacts on the technology sector, rather than stock specific issues.  A Zignals Alert set for a price cross below $100 would be a good time to take a second look at Baidu, and gauge whether there is an opportunity for a support buy, or if it's time to head for the exits.



Priceline suffered a sharp drop just three days after it featured here. Disappointing guidance was blamed for the sell off, but the company had just reported a 20% increase in revenue, with a net income of $7.85 which was ahead of analyst estimates of $7.36 a share.  While a guidance of $11.78 per share in net income may be viewed as disappointing, it's significantly ahead of the $9.95 reported for the comparable quarter last year. Historically too, Priceline is in the habit of coming in ahead of expectations. Stock price has recovered somewhat, but it's now in an area where 'weak' bag holders may decide enough is enough. A drift below $600 would probably see sideline money come in to support it.  Despite all this, the stock retained its second spot in the scan (as ranked by Market Cap).



HDFC Bank manged to buck the trend of the previous two stocks by actually moving higher.  The stock handily cleared $36-36.50 resistance at the second time of asking, helped by an earnings report which showed 30% rise in profit from the prior-year quarter. Deposits were also up 22%. However, the company also reported a 26% rise in costs for the same period. But overall, the news was deemed positive enough to support the breakout.  For a stock which is news-lite, there should be enough momentum to see it get to its next earnings release.



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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell it in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

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What Next For The S&P?

When I last ran this piece in March, the S&P was trading at 1,412, and the mean six month projection based on relative position of the index to its key moving averages was around 1,518 (95% confidence interval of 1,464 - 1,572).  Six months later, the S&P closed at 1,447 which was under the 95% band projection.  There was a similar under-performance in November of last year.   However, the index is higher than it was in March and posted a swing high, which fell inside confidence interval projections.

The 12-month projection from March calls for an even higher move to 1,622.  For this to hold true, a powerful 'Santa Rally' would have to exceed what has come before. The low end of the 95% Confidence Interval calls for a push to 1,540, which isn't as far fetched, but requires another 100 points from where the S&P lies now.

But what of the current situation?

As of October 1st, the S&P was trading 6.2% above its 200-day Moving Average, 2.2% above its 50-day MA and was effectively flat (0.1% above) against its 20-day MA.

Historically, this situation has occurred 18 times in the past, with six of those cases clustered during the 1950s (the start date is 1950), and another four in the 1960s. In the past thirty years there have only been five such matches.

During the 1950-60s there was underlying bullish market, punctuated by quite sharp bearish reversals.  This give way to the inflationary 1970s, against an underpeforming stock market. Visually, the current situation looks to have more in common with the 70s than the 50s, less the inflation, but there is nothing to suggest a repeat of the go-go 90s!

If we map each individual case of the 18 matches over a 1-year projection, we get the following (average in blue, 95% confidence intervals red/green):

The projection for the next 12 months is mildly bullish. There was an extreme upside of 17%, after 6 months, in 1954. Or a worse case plunge of -13%, as emerged in 1972, for the same 6-month period.  The 95% Confidence Interval straddles the zero line and doesn't support a runaway rally for the next 6 or 12 months.  It's also unlikely the 12-month projection from March will be fulfilled.

In light of this, the next few months are likely to be quiet, and the 'Santa Rally' - if we have one - will be modest. When Obama was elected, the market swiftly headed south, and his re-election may trigger the same response.

With the June-Oct rally maturing, it's going to be sector pockets which will perform.  Health Care was a key beneficiary in recent days, with Technology struggling to keep pace.  In the broader view (weekly charts) picture, leading sectors have been Staples and Utilities, both defensive plays. With market leadership coming from defensive sectors, it suggests the current rally is in an end-game scenario.  Although the aforementioned projections suggest a period of flatness, rather than an outright decline, is the more likely outcome in the months ahead.

In light of this, there are some targets one can set Alerts for to keep track of things:

Current 6-month projection for S&P set for March 2013: 1,475 (SPY: $147.52)
Prior 12-month projection for S&P set for March 2013: 1,622 (SPY: $162.20)
Upper 95% confidence interval of 6-month projection for S&P: 1,542 (SPY: $154.20)
Lower 95% confidence interval of 6-month projection for S&P: 1,419 (SPY: $141.94)
Historical worse case 6-month scenario for S&P: 1,256 (SPY: $125.63)

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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell it in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.
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What Next for the S&P? Bullish Outlook

The past few months have been very good for bulls with the S&P adding 22% since the 2011 November swing low.  When analysis on projections for the S&P was done a couple of days after the November swing low, there was no clear advantage for either bulls or bears. The conclusion then was:

In summary, despite the projection uncertainty, there appears to be more on offer for bulls than bears. Although context should be drawn from a January 2011 projection which currently requires the S&P to rally by over 6% in the space of a couple of months, just to meet the low-end of the 95% confidence interval range!

Looking at the January 2011 projection, at the time of writing the S&P was trading at 1,276. One year later it was at 1,316, a 3% gain; this failed to meet the low-end expectation of the 1-year projection. Effectively, the S&P at the end of January was well below the bullish expectations of a year ago. Since then, the S&P has managed to add another 7.5% to make its position more respectable, but has it reached a point where it could be considered fair value? 

As of March 26th the S&P was 12.0% above its 200-day MA, 4.6% above its 50-day MA and 2.4% above its 20-day MA.  How has this compared in the past?

While the S&P is currently bullish it falls just outside of the top 10% of bullish extensions from the 200-day MA (No. 1 spot is held by November 3rd 1982 when the S&P was 23% above its 200-day MA).  Looking back to 1950 there were 19 historic matches to the current scenario.

Interestingly, back in November 2011 the S&P was matched to April 2003; currently the S&P is matched to September 2003, so the events of 2003 still hold relevance. 

The other aspect of note was the clustering of matches; three for 2003/04, five for 1995/96/97 and three for 1954/55.  All clustering occurred in strong bullish environments.  In fact, with the exception of 1959, all the matches offered a bullish outlook for the year ahead.

The Mean and 95% Confidence Interval offered a very bullish outlook going forward

Whether the S&P disappoints on that projection, as taken from January 2011, remains to be seen. Of the 19 matches, only in 1980 was there a significant decline in the month following the match - shifting a 10% loss before recovering a net 4% gain after 6 months.  So while future weakness can never be excluded it would be surprise if losses lingered beyond 6 months.  Traders can use Zignals Alerts to help track the S&P or its SPY proxy.

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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell it in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

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Active Stock Screen: November 30th

Since the last update in November the S&P was trading at 1,262 and stocks were still enjoying the fruits of the October rally. Since then, markets have eased, although some of these losses have been recovered over the past three days.

Our group of 8 stocks, ranked by Market Cap, were led by Apple (AAPL), followed by Rio Tinto (RIO), Cnooc (CEO), Barrick Gold (ABX), Baidu (BIDU), Priceline (PCLN), HDFC bank (HDB), and Yanzhou Coal (YZC).

The stock screen used the following parameters:

• % Chg EPS; Q to last yr Q of 25% or more
• % Chg EPS; YTD to last YTD of 25% or more
• % Chg Revenue; YTD to last YTD of 25% or more
• Return on Average Equity of 17% or more
• 5-yr Revenue Growth Rate of 15% or more
• Market Cap of at least $50M
• Net Profit Margin of 18% or More
• Current price above $12
• Average 10-day volume above 250,000 shares

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What next for the S&P?

At the end of August I signed off with the following:

The S&P may yet take another turn lower, particularly when we enter the seasonally weak September/October period. But should it turn into (or get close to doing) a "15%+" decline event from its 200-day MA then it may yet prove to be one of the greatest buying opportunities for the next decade or more.

October did play to seasonal form and the S&P ultimately dropped 14% from its 200-day MA, but will the 1,099 close of October 3rd stand the test of time?

As for the economic climate.  The PIIGS are still rolling around unsupervised in the muck.  New governments are taking shape in Italy and Greece. France and Germany agree to disagree. While the rest of the world look on wondering who will be next (which may require looking in a mirror).  

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Engineering a Trading Strategy

Strategies can be designed and built using Trade Timer or the backtest feature of the Strategy Builder. For an individual indicator, Trade Timer is the way to go, but if you are looking to compare a number of indicators together then Charts can be used to identify favoured signal triggers.

[1] Select a stock on a two year chart with the indicators of choice. In this example we will use three moving averages (10-day EMA, 20-day EMA and 50-day EMA) with the Money Flow Index. The stock you choose should be representative of the stock(s) you wish to trade with respect to Beta.

[2] Highlight the ideal buypoints. This is to focus the eye on the conditions of the technicals at this time (also price relative to the moving averages).


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Active Screen: CANSLIM September 23rd

With the shaken-and-stirred action of the past few few days fresh in the memory, how has it panned out for our top-8 Active Screen stocks over the past couple of weeks. Our active stock screen used the following criteria:

The results were little changed, which highlights one of the weaknesses in fundamental screens in its failure to accomodate for momentum - Energy/Commodity stocks are getting killed out there; five of the top-8 (by Market Cap) belong to this underperforming sector. In defense of this scan, the 'M' of CANSLIM would remove all of these stocks from consideration.

Luckily, top dog remains Apple (AAPL). The consolidation played out to form, the tightening action eventually breaking in the direction of the trend (as dictated by the 200-day MA), i.e. higher. Important for the stock going forward is it remains above the consolidation - which really means holding above $390. Secondary level of support between $353-363.



Second place Vale S.A. (VALE) followed through on its bear flag; breaking below consolidation support, but also losing the July reaction low of $24.32. Rough times ahead. If a measured move was to evolve from this then another 24% could be trimmed off the price from the breakdown; this sets a downward target of $20.14.



Third place was Rio Tinto (RIO). It suffered a similar fate to Vale S.A. in breaking the Bear Flag and moving lower. Little to recommend at the moment.

Oracle (ORCL) was dropped so in fourth place is promoted Barrick Gold (ABX). Not surprisingly, Barrick Gold (ABX) suffered the same fate as its peers, dropping over the past couple of days, but not enough to see a challenge on trading range support. The stock has had a quiet 2011, but this low key approach may benefit it given the general carnage in the sector.



Prior weakness in Baidu (BIDU) resulted in the break of channel support. A break which was accompanied with higher volume, a confirmation of the breakdown. It's  currently on the way to testing $115 support.



Another commodity stock on the rocks holds sixth spot. Free McMoran Corp (FCX) had already lost support in early August, so this week's selling just piled on the pain. $33 support is now resistance. The best hope for bulls is a higher volume rally which closes above $33 over the next couple of days. If this was to happen then a 'bear trap' would emerge and a rally towards $42 favoured.



In seventh spot is Priceline (PCLN). The potential 'bear' trap has instead evolved into a wider, yet narrowing, consolidation. It's going to take a little longer for this consolidation to resolve. For now, it's above the 200-day MA with rising support just below.



In eighth spot is Yanzhou Coal (YZC). Unfortunately, the stock is in freefall since it lost $36 support at the start of August. It currently trades at $22 and doesn't look like it will be going higher anytime soon.

If you are interersted in creating your own CANSLIM stock screen you can do so here. You can read more, and watch a video, on creating an active stock screen here.

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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell it in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

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Active Screen: CANSLIM August 13th

With our updated screen criteria there were a couple of changes in qualifying stocks. Our active stock screen used the following criteria:

Of the stocks in this scan there was only one change from last month: CNOOC (CEO) was dropped and Rio Tinto (RIO) made a return. The remainder of the list was unchanged.

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S&P - Not So Extreme...

A couple of weeks ago, extreme extensions of the S&P to its 200-day MA were examined dating back to 1950. The simple conclusion was such extremes were rare, even for a relatively modest 15% move away from the 200-day MA.

In this article, the 10-15% range from the 200-day MA was examined for the S&P. This period included the August 2011 swing low. The year and month when this event occurred was recorded in the table below.

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Getting Started with Zignals Free Stock Charts

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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

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Low Extremes in the S&P

As the market takes another step higher I took a quick look at S&P price low extremes relative to its 200-day MA. The data covers the period of 1950 to the present day, so it does leave out the 1929-1933 period. But the table does highlight the rarity of extreme sell offs.

Over a 60 year period there have been 10 years when the S&P was at least 15% or more away from its 200-day MA and only 4 years when it was 25% or more. The months, November 2008 and March 2009, when the S&P was trading more than 30% below its 200-day MA, are actually very rare events.

But the rarity of such events offers its own problem. If you were a buy-the-dip player and bought stocks when the S&P was 15% or more from its 200-day MA it would have been a tough call to have held those stocks as losses mounted in the latter part of 2008 and early 2009.

Even then, the 'average' frequency for a sell off greater than 15% from its 200-day MA is 1 year in 6. So if you bought at the 15% extension - then sold soon afterwards as losses continued - you could be waiting another 6 years for the next buying opportunity! However, one could be waiting even longer given the clustering behaviour of selloffs. There was a 13 year gap between 1974 to 1987 and 1988 to 2001.

The recent decline is interesting because it followed a lengthy range-bound (dull) period. The resulting fall garnered more attention because it was so hard and fast. As a result, it quickly extended itself from the slow moving 200-day MA, maxing at a loss of 13% from its 200-day MA on August 8th. While the S&P has recovered the bulk of this loss, the early August decline came very close to becoming one of those rare "15%+" events.

The S&P may yet take another turn lower, particularly when we enter the seasonally weak September/October period. But should it turn into (or get close to doing) a "15%+" decline event from its 200-day MA then it may yet prove to be one of the greatest buying opportunities for the next decade or more.

What will history show ten years from now?


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Learn How to promote your Zignals Trading Business with Twitter.

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Build a trading strategy in Zignals and potentially earn money too; download our Build a Trading Strategy PDF and get selling (and trading) today!


Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

JOIN US TODAY - IT'S FREE!You can use a Zignals market alert to track 15% declines; the SPY 200-day MA sits at $127.79 which means a "15%+" decline event will occur on a Price Crosses Below $108.62 . Because the 200-day MA is a slow moving average it may only be necessary to update the Crosses Below value just once a week, updating the value daily when the current price gets close to the trigger price.
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Active Screen: CANSLIM v2 - Aug 25th

I picked up on a comment left on a previous CANSLIM article in March 2011.

CANSLIM/William O'Neil does not use any YTD to Last YTD comparisions. I suspect, you used these as the site lacks a Q to last Yr Q for the last 3 qtrs. In addition, it is acceptable to have prior qtrs be less than 25%, as long as you have accelerating EPS gains and the last Qtr is above 25%. You should add sales growth (Q to last yr Q) above 25%. As for annual earnings gain, the last year should be 15%, with 3 yrs of growing EPS - a 5 yr growth rate of 25% is ridiculus - as it would exclude many growth stocks that have started their move in the past year. You should also add in profit margins of at least 18%. Just to ensure institutional quality stocks, screen for stocks >$12, 250K in avg daily volume and within 20% of it's 52-wk high.

In response, I have tweaked our original scan to take on board some of R. Paluszak's concerns. Some of the issues raised can be addressed in a later version of Stock Screener, but based on existing Screener criteria the CANSLIM screen will adopt the following parameters.

Topping the scan is still Apple (AAPL). The stock will get plenty attention today following Steve Jobs announcement. Premarket prices show it trading around $366 which is above a thick band of support running between $355 and $362. The 200-day MA has risen to $342 which will offer another tier of support. Will investors buy the news?



Second spot is held by Vale S.A. (VALE). But this is a stock which is struggling to recover from a 24% trim in price at the start of April. It's doing what it can to hold $24 support but it's hard to see it getting past its 200-day MA or 50-day MA anytime soon.



The new search criteria has brought Oracle (ORCL) onto the list in third spot. However, having lost its 200-day MA in July it has experienced a steady march towards lower prices. Primary support exists in a thick band between $21-$23, but given it was quick to cut through July breakout gap support at $26 buyers may be less willing to step in. One to avoid.



Fourth spot goes to CNOOC (CEO). Stock price action is also sickly, falling hardest once its 200-day MA was breached. It's attempting to find support around $180, but even if the stock does bounce it will quickly run into resistance marked by prior swing highs. Look for narrowing price action in the months ahead.



Fifth on the list is Barrick Gold (ABX). Unchanged from before is all one can say here. Stuck in the middle of its trading range.



Sixth was Baidu (BIDU). The recent decline held converged 200-day MA and channel support. As long as the sequence of higher lows and higher highs is retained the trend is bullish and buys are favoured. The one negative has been the tepid buying volume on up days compared to selling volume on down days.



Next up is Free McMoran (FCX). The stock has gone from breakout, to breakdown, to failed rally. It held $42 support which offers an opportunity for buyers to launch a second attack on $47 resistance. A failure to do so would bring into play next support at $32.



The final stock on the list is Priceline (PCLN). In the last update it was trading at support, but has since lost trend support on a gap down. It's in the process of confirming the break with a mini-rally. Shorts are likely to be active at current prices with the breakdown gap all but closed. A move above $500 would likely send them scrambling, but until then it may be one to sit out and see how it plays out.



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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

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Active Screen - CANSLIM: Top 8 for August 11th

Market selling shuffled the deck on top-8 qualifying stocks. Since the last update in July we have seen Cognizant Technology Solutions (CTSH) and Silver Wheaton Corporation (SLW) fall from the list and Priceline (PCLN) and FreeMcMoran (FCX) added, the latter making a return after its cut in May.

The CANSLIM stock screener settings employed were:

Top dog is still Apple (AAPL) and its market leading $338bn Market Cap. Shareholders have been reluctant to sell despite surrounding carnage. To the extent the stock only tested the February swing high at Monday's troubled close - a test which has so far held as support. However, a real bear market sinks all ships and while it may prove resistant to selling now, Apple is not immune too it. Apple does enjoy a thick band of support between $355 and $363. Should this give way, then the next area to watch for buying is $330.



Next on the list is Vale S.A. (VALE). The lack of buying interest around its 200-day MA quickly took its toll when sellers emerged in force. The stock cleanly sliced its 50-day MA, leaving it scrambling for support at the July reaction low. With a 'Death Cross' in play since May it's likely to encounter a glut of supply was it to challenge $30.



In third place is Baidu (BIDU). Like Apple it enjoys a well defined uptrend which has (so far) absorbed most of the selling thrown at it. June saw a successful test of its 200-day MA, and this swing low combined with the December low and April-July swing highs presents a solid bullish channel to guide traders. The presence of the 200-day MA nearby lends additional weight to channel support.



Fourth on the list is Barrick Gold (ABX). This is one of the few stocks to have changed little over the past couple of weeks. The stock remains stuck inside a broad $42-$55 range as it currently negotiates a flat-lined 200-day MA. A straightforward hold for now.



Next on the list is newly returned Free McMoran (FCX). However, it's return to the list may be brief. After a failed attempt to break from a consolidation in July it quickly undercut its 200-day MA and support of the prior consolidation. Next downside target is the September swing low at $33.



Priceline (PCLN) is the fresh face to the top-8. This is another steady performer along the lines of Baidu and Apple. Since the start of May its price has been 'coiling' in preperation of its next big move. This move should be higher based on the prior trend, but you wouldn't want to bank that in the current market environment. But a Zignals Stock Alert on a break of $550 will keep you informed when it does.



Netflix (NFLX) was one of the early channel breakers after its announced price hike. Therefore it's of no surprise it followed through to test its 200-day MA in the light of broader market action. Next question is whether it can bounce off it? So far, so good.



Finally, Agrium (AGU) has started to stir, although the omens are not good if you are bull. After a protracted sideways trading range dating back to last October, it rapidly sold off to $78 support. The Accumulation Swing Index shows a new low, which suggests $78 support won't hold for long. Next level of support is back at $50.



------

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Build a trading strategy in Zignals and potentially earn money too; download our Build a Trading Strategy PDF and get selling (and trading) today!

Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

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What Next For The S&P?

In my last post in February 2011, I had talked of an upside target of 1,392 based on an assumption 1,275 support held. Other than a brief spell below 1,275 in March, the S&P managed to rally to 1,370 before it fell back into the 1,260-1,345 trading range. This was the way until August when it said goodbye to its 200-day MA and to 1,260 support.

The rapid drop put the index into a unique situation which offered few parallels. At Monday's close, the S&P was 13% below its 200-day MA and 20-day MA, and 14% below its 50-day MA. At no time since 1952 has this scenario repeated.

The closest match we get is December 1973. Here the S&P was 13% below its 200-day MA, 11% below its 50-day MA and 5% below its 20-day MA.

Despite making a brief recovery above its 20-day and 50-day MAs in the first quarter of 1974, the outcome was ultimately bearish as sellers again struck in the second half of 1974 to knock a further quarter off the market.

The good news for bulls is we have only a single data point to work with, so there is nothing concrete to suggest the same will happen again. However, it's a warning not to fight the trend, particulary when there is a decisive break of the 200-day MA as is the case now. Use Zignals Stock Alerts to keep you informed as to when your favorite markets and stocks cross above their respective 200-day MAs.

If you haven't taken a holiday from trading, now may be the time to do so.

---------

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Build a trading strategy in Zignals and potentially earn money too; download our Build a Trading Strategy PDF and get selling (and trading) today!

Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

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Active Screen - CANSLIM: Top 8 for July 14th

There was no change in the top-8 qualifying stocks from June 28th.

The CANSLIM stock screener settings employed were:

Top of the list remained Apple (AAPL). It continued its rally off channel support, not pausing as it broke through channel resistance. It is currently knocking at the door of the 52-week high at $365 with support at $350. A loss of $350 would leave a small 'bull trap', making it harder to mount another challenge on the 52-week high.



Vale S.A. (VALE) gapped out of its 6-month declining channel and in the process closed above the 200-day MA. Since the break it has been lingering around the 200-day MA, but has held well above the former channel. There are two overhead resistance levels at $34 and $35; a break of the latter sets up nicely for a challenge on $37 as $35 would turn into strong support (i.e. good risk:reward)



Baidu (BIDU) posted a channel break on June 28th. In the past couple of weeks the stock added to the break with a push to $148 before easing the past few days into the low $140s. Volume has been light, so whether there is the momentum to mount a challenge on $154 remains to be seen. Support at $137.



Barrick Gold (ABX) is in a bit of a limbo. The good news is the bearish head-and-shoulder pattern has broken. The bad news is the resulting rally has converted the head-and-shoulder into a broad, sideways consolidation; support at $42-43 and resistance at $54-56. The spanner in the works is the 200-day MA which is currently playing as resistance.



Cognizant Technology Solutions (CTSH) recovered from its drop below $72 and 200-day MA support to rally as high as $77. It's currently leaning on the 200-day MA as support but if this fails then the broader downward channel can't be ignored.



Netflix (NFLX) has been rising steadily in the face of market negativity. The current advance has yet to confirm a rising channel, but there is a 'natural' upside target for bulls to aim for.



Agrium (AGU) maintains its low key, range-bound trading. Prior supply around $80-85 has shifted to demand with additional support at the 200-day MA.



Silver Wheaton (SLW) escaped the squeeze with an upward break, rallying past $37 resistance and up to the March swing low at $38 (minor resistance). Volume has picked up along with the rally which favours its continuation. Key resistance at $46, support at $37.



------

Why not create your own Active Stock Screen. Watch this video to find out more:



Take this a step further and build an Alert on to your Active Screen list.



Why not start your Zignals Trading Strategy Business with us today? Learn How to promote your Zignals Trading Business with Twitter.
Follow us on twitter here
Build a trading strategy in Zignals and potentially earn money too; download our Build a Trading Strategy PDF and get selling (and trading) today!

Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.
Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.
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PatternDNA of the week: AJGFD

This week's rare pattern appeared in Baidu (BIDU). At a neutral Match setting the pattern was found only 28 times from 18 stocks over the past year. It opens with a strong bullish day and is followed by a sequence of three bearish days before finishing with a modest bullish day. It is similar in appearance to the more commonly known "Rising Three Method" continuation pattern.



It had an interesting dynamic between short term, and trade performance. Short term performance improved as the match conditions tightened, but the long(er) term trade performance - as measured by Average Return per Trade (Average Return per Trade applies an initial stop of 10%, raised to 5% off the price reached on a 15% gain. Ultimate Profit Target of 25%) - fell.

Match	No. of Patterns	1-day % Win	2-day % Win	5-day % Win	Average Return Per Trade (> 5 day)
Weakest	125	53	52	57	4.5
Weak	61	61	61	61	4.2
Neutral	28	64	67	66	3.9
Strong	6	83	83	83	2.6
Strongest	4	75	75	75	4.8

Unlike some of the former PatternDNA patterns we have featured, this particular one offered the most at the Weak match. Ordinarily, the Strong match tends to be the sweet spot for a particular pattern, but given the low sample size it's hard to be convinced on merit here. Also, at the Strong match, only half of the potential trades were profitable, compared to 61% at the Weak match (data not shown) - hence the higher Average Return per Trade.

Baidu (BIDU) was one such stock with this pattern, but at the Weak Match there were 81 matches in the S&P and just 12 at the Neutral Match.

One of the stocks in question was Chubb Corporation (CB). Chubb made a solid breakout in the middle of April and held those gains as the market headed south. It is nicely positioned to take advantage of the bullish implications of this pattern.



Learn more about PatternDNA in this video:

Why not start your Zignals Trading Strategy Business with us today? Learn How to promote your Zignals Trading Business with Twitter.

Follow us on twitter here

Build a trading strategy in Zignals and potentially earn money too; download our Build a Trading Strategy PDF and get selling (and trading) today!

Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies.

Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock quote watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too. Build your own trading system and sell your trading strategy in our MarketPlace to earn real cash. Read what others are saying about Zignals on Investimonials.com.

JOIN US TODAY - IT'S FREE!

Read more!