Screening Process and Watchlists
I’ve been asked by several TRi members lately how I can keep track of so many stock and crypto ideas. Between my own portfolio and names I’m following the number of assets I’m tracking adds up fast. My stock list currently has 400 names on it and then there’s crypto on top of that. It can be time consuming and overwhelming to keep it all together so I’m constantly refining and reworking my system to make it more efficient. Here are some thoughts I have that may help you in managing your watchlist.
First off you need to be in touch with what type of trader you are. Are you a long term investor or a short term trader? What asset classes and markets will you be operating in? Are you going to limit your scope to a certain number of names to track and if so what is that number? Are you using fundamental analysis or only hunting technical setups? These are all great questions to ask yourself before building your watchlist system.
Personally, I like to try and have fun with this stuff and I really like digging through information about stocks and crypto. I want to keep an open mind about every name that crosses my path and I don’t have a specific cap on the number of names I track or the number I’m willing to have in my portfolio. Because of this I probably follow an unhealthy number of names, haha. I would only go down this path if you really want to dedicate a full time job worth of time to it. I also think it’s easy to argue that it’s better to keep your portfolio to a smaller number of names than I do but what the hell I am how I am and it works for me. At the end of the day you have to find what works for you and go with that.
I’m ok with having a large watchlist but I really want to make sure that I’m only looking at quality names and weeding out all of the junk I can’t afford to waste time on. Ideally my watchlist will only show names that have already been vetted from either a fundamental or technical screener. My general approach is to first screen for fundamentals and then once I have a list of vetted names I can go and hunt technical setups from that list. In stock land I’m mostly interested in small cap value names so my fundamental screener looks at things like Shares Outstanding, P/B and P/C ratios and Debt to equity. Here’s a screener on Finviz that I have used with good results. In regards to crypto, I find fundamental screening to be more difficult than stocks and it’s open to a little more personal interpretation as there are not the same types of metrics you can see in equities. I tend to look at crypto from more of a sentiment perspective. What are the names that the knowledgeable community likes? I rely a lot on the TRi community here as there’s a lot of smart crypto people sharing their knowledge. Coin Gecko is also a great resource to screen names with.
Another approach is to use a technical screener that looks for a chart pattern or indicator confirmation and alerts you when it happens. The TRi Screeners do precisely this and there are endless combinations you can set up yourself and get notifications on new ideas every day. My personal favorite is Brian Beamish’s Key Reversal Signal but we have other ready-made screeners from other TRi members and algo builders.
Once I have my watchlist full of quality names I do a quick scan once a week to see if anything is setting up and ready for a trade. I journal my observations and make sure I am always cycling back to names that might need more time to develop. If new names pop up they get thrown into the mix. This is a continual process that requires focus to not lose track of potential opportunities. This is where journaling is key as it is impossible to commit all of this to memory. Personally I use airtable.com to create a spreadsheet that acts as a database for all my journal entries on a stock by stock basis. If you are already a TRi member than you will now have access to my watchlist as I will be sharing all my activity starting this week. If you’re interested in seeing this list then hop of the site and message me for access. At the moment I am the only contributor to the list but I hope to have a few more TRi’ers adding their input in the near future.
Dow Theory Follow Up
Just a quick follow up from last weeks article on Dow Theory for anyone who is following along. The Dow confirmed a weeky M last week so we do not have divergence between it and the transports. While this means that there is technically no Dow Theory sell signal, both the DJI and DTX are looking bearish and might be in for a downwards correction moving forward.