August 12, 2012
Uncategorized
By Geoff Bysshe
In the last half hour of last week the markets rallied to close at their high of the day and basically the high of the week. When the market rallies into the close it’s a good idea to see which stocks not only moved up, but also traded on greater than average volume.
Stocks trading up into the close on big volume are great candidates for day trading the following day because the range created by the last half hour of the trading day is often a key area of support and resistance over the next several days. This intra-day trading action can also help you find volatile stocks breaking out of good swing trading patterns. A few examples of stocks that are set nicely for day trading or swing trading taken from the scan shown below include IBM, UTX, FMCN, HP and MMM.
One of the patterns I look for in the intra-day 5-minute charts when I review the list of stocks is a condition where the high volume and price movement occurs over multiple bars within the last half hour. One big 5-minute period may enable the stock to qualify for the scan, but I prefer to see that the buying interest was not just one big spurt.
If you look at the 5-minute chart for the stocks I’ve highlighted in the scan results below you’ll see what I mean by the price and volume occurring over multiple periods during the last 30 minutes of trading.
The list of stocks below had to qualify for a number of criteria so that I could find, strong price action, big volume, and a close near the high of the day. For HotScans members, if you use the link below you’ll be able to scan the market with the same criteria, and you’ll see the criteria are pretty straight forward if you look at the setting by selecting “Advanced Filters” above the table.
Click here for the preset scan for stocks near the high of the day and moving up on good volume in the last half hour. (You'll need to be a subscriber for this scan too work)
I also used one cool unique feature of HotScans that you may not notice right away. This feature is the ability to filter a stock’s price action based on how it has moved relative to its average range. This helps alleviate the bias toward high priced stocks dominating the results when you scan based on a dollar move, or low priced stocks dominating with you scan based on a percentage of price move.
In this case I required that the stocks move at least 10% of their average daily range in the last 30 minutes. In other words, I’m requiring that the stock have at least a decent move in the last 30 minutes relative to its normal volatility. Finally, I also required that the last half hour trade 50% greater than average volume. Finally I sorted the table to order results by most unusual volume.
You’ll find this ability to filter price action by the percent of Average Range, dollar change, or percent of price in the Advanced Filters labeled as “Define Price Change”.
You can see the how I set the price and volume filters marked by the red box on the screen image below. It is the upper left section of the Advanced Filters page. The setting to require that the stock close near the high of the day is not shown here.
You may notice that the right most columns display price and volume action labeled as “Previous Per.” This is how the stock had performed from the prior day close up until the last 30 minutes. By displaying this data I can see how much the stock was up or down and its level of volume before it started its late day move.
As you can see, even on a slow day in August you can find powerful price and volume patterns. If it works this well in August you can be sure that it works well on any other trading day too. I used it Friday because I wanted to find stocks that were doing better than the market in the last half hour so I’d have some good trading candidates for next week.
Here are the results of the scan:
