Here’s How to Be Ready the Next Time Stocks Pull Back
[showmodule id=”58959″]
Stocks just had one of their sharpest pullbacks of the year, creating opportunities for investors able to quickly discover opportunities.
The screenshot below shows TradeStation’s Scanner tool. It’s programmed to detect stocks trending upward before the crash that may offer potential entries. The results include prominent growth companies like Tesla (TSLA) and Amazon.com (AMZN), along with value stocks like Morgan Stanley (MS), L Brands (LB) and T Rowe Price (TROW).
The scan uses two basic principles. First, it looks for symbols with positive intermediate-term momentum. (Scanner achieves this by isolating stocks above their 50-day moving averages.) Second, it looks for short-term pullbacks. Here’s how to program it:
Click on the Apps button at the top left of TradeStation and open Scanner.
Name the scan. (Something like “Pullback Scanner.”) Click Next.
On the following tab, select All Stocks. (You could include just Nasdaq or NYSE issues as well.) Click Next.
On the next tab, click <Select Criteria>, then Price → Last.
In the Operator column to the right, select “>” (greater than).
In the Field/Value to the right, Select Indicator → Mov Avg 1 Line.
Click on the “+” to the Left to expand and change Length to 50.
This will find all symbols whose last price was above the 50-day MA.
On the next row, select Price → %Chg → %Chg(5 Day)
In the Operator column to the right, select “<” (less than).
In the Field/Value to the right, type “-3”.
This will find all symbols down at least 3 percent in the last five sessions. (Short term pullback.)
Scanning for Pullbacks
The scan will likely return a large number of results, including many obscure and illiquid stocks. We can add two more criteria to eliminate those:
This will find stocks with at least $5 billion of market cap.
Volume → VolAvg (10 day) > 1000000
This will find stocks averaging at least 1 million shares of volume per session over the last 10 days.
Scanner is highly flexible. You can include (or exclude) stocks in certain indexes. You can screen for companies with certain fundamentals like earnings growth or P/E ratios. Options traders can even isolate underliers with heavy option volumes. This is a relatively unique functionality because many stock scans focus only on fundamentals or only on technicals. But TradeStation lets you combine an indefinite number of criteria of your own choosing.
In conclusion, the market frequently provides opportunities to investors who can react to new circumstances. Hopefully this article helps you use TradeStation’s tools and functionality more effectively the next time a pullback occurs.
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial.
Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.
Money is flowing back into stocks as investors hope for a better inflation report this week. The S&P 500 rose 1.9 percent between Friday, May 3, and Friday, May 10. It was the third straight positive week. More than four-fifths of the index's members advanced,...
Oracle jumped to new highs almost two months ago. Now, after a pullback, the software giant may have found support. The first pattern on today’s chart is the gap higher on March 12 after earnings surprised to the upside. ORCL retraced the move and is starting to...
The stock market is bouncing after a dip. Are any companies stabilizing as sentiment recovers? Today's article will consider a method for discovering potential opportunities. It uses TradeStation's EasyLanguage scripting tool to create a custom indicator, which can...
Leaving TradeStation
You are leaving TradeStation.com for another company’s website. Click the button below to acknowledge that you understand that you are leaving TradeStation.com.
This event is hosted on YouCanTrade. The information for this event is being provided for informational and educational purposes only.
You are leaving TradeStation Securities and going to YouCanTrade. YouCanTrade is an online media publication service which provides investment educational content, ideas and demonstrations, and does not provide investment or trading advice, research or recommendations. YouCanTrade is not a licensed financial services company or investment adviser and does not offer brokerage services of any kind.
TradeStation Securities, Inc. provides support and training channels hosted on YouCanTrade, its affiliate. Other than these support and training channels, any services offered by YouCanTrade are not sponsored, endorsed, sold or promoted by TradeStation Securities and it makes no representation regarding any YouCanTrade goods or services.
To acknowledge you are leaving TradeStation Securities to go to YouCanTrade, please click
This website uses cookies to offer a better browsing experience and to collect usage information. By browsing this site with cookies enabled or by clicking on the "ACCEPT COOKIES" button you accept our Cookies Policy. To block, delete or manage cookies, please visit your browser settings. Restricting cookies will prevent you benefiting from some of the functionality of our website.ACCEPT COOKIES