This is a simple filter that I derived from something Dr. Steenbarger wrote regarding the various indices and what happens after they go down for a period of time. Needless to say after a decline there is an appreciation. Most of the time anyway.
The filter is fairly simple -
show stocks where close is between 15 and 30
and average volume(90) > 500000
and low < low 1 day ago
and low 1 day ago < low 3 days ago
and low 2 day ago < low 4 days ago
and low 3 days ago < low 5 days ago
And no that isn't a mistake - I skip a day up until the last day. I learned to skip a day from another stock market analyst who has brought some new thinking to the market - Tom DeMark. Mr. DeMark has written a number of books devoted to his methods - they're worth a scan if you have the time. I'm not that much of a true believer but I've used the skip-a-period method for so long that I know it is the best way to look for a sequence of declines or rises. I also use lows when I am looking for a sequence of down days. I want to see how far the bears are pushing the stock not how far the bulls are taking it back.
The filter back tested well but this time instead of giving you some percentages from back testing I thought I'd isolate out the various selections of the program over the last 20 days and show what has happened to them since.
20 - INTC = 6.75%
19 - AMAT = 8.7
18 - MOT = -12.95
17 - GLW = 2.77
16 - GM = 4.95
15 - S = -9.4
14 - JNPR = 7.2
13 - YHOO = 15.51
12 - CSCO = 7.4
11 - DELL = 4.43
10 - CHK = -4.8
9 - JDSU = -3.1
8 - CHS = 8
7 - CDNS = -.06
6 - STX = 1.59
5 - SGP = 4.15
4 - GPS = .2
3 - HAL = 1.43
2 - NOK = 2.15
1 - BJS = 2.66
Which isn't too bad - 15 winners and 5 losers just picking the top most volume stock in each day's output without any other consideration. The only other constraint was only going to each stock once during the run.
As always I provide these filters to stir your imagination and to show that it is possible to find good trades in the market using just straight technical analysis.
From the above list I currently have a position in GLW.