I have done some thinking, about how I can improve results in a more systematic method, and I came up with a method of stock selection that I believe will produce great results. I intend on posting this fairly regularly. Perhaps weekly, perhaps biweekly, or but at least once a month. Since this is the first time I am introducing this method, I want to create a post explaining it. In the future the posts will only contain the list of names, unless I decide to modify the method slightly.

Alpha pointed out the site Http://Stockcharts.com, so I’ll be using it to help me out identify price targets quickly and without much bias. It probably wont hurt me too much if I pass up some stocks, and by doing this I can quickly narrow down a large list. I am just using the daily targets, I haven’t been using stockcharts or P+F for that long don’t know whether or not weekly is more reliable, or the time frame of it.

In the past I read a method on stockbee’s blog that talked about how you could use the IBD 200 to find stocks that broke out on increased volume over a million and that were up over 4% as a way to beat the market and potentially identify stocks that could go up 100s of percent. Well that kind of showed me the power of the IBD 200. I like the concept of finding stocks that can make significant moves on increased interest. However, I think the goal is finding stocks capable of big up moves, that are likely to make such moves. I believe that a better way to acheive this is to simply find stocks with price targets over 50% from the current price. I could certainly narrow it down to stocks up over 75%, But went with 50% or higher, as I wanted a larger list to select from, where I could screen down farther.

So what I’ve done is taken the IBD 200 which is listed on Thursday, and I’ve put the names into stockcharts and selected those targets above 50%. Stocks in the IBD 200 are those with composite rankings 96 or higher, which is measured based on a variety of things. Pradeep from stockbee comes up with a compelling reason to use the IBD 200

I love the IBD 100, which shows you thumbnail charts of each stock, but unfortunately, you have many stocks that have already made part of their move, and some which are over extended, and some which have completed their move and are reversing. By including all of the top 200, you have a wider selection and can find those that still have a large move left, perhaps those that have increased amounts of orders, and have vastly increased their potential, before they posted the numbers often enough to have high enough EPS or RS rating to be in the IBD 100.

But there’s lots of stocks with huge potential, but huge downside as well. Now that I’ve got it screened down to stocks that still have potential to move up huge to the upside, I want to find those with managible risk. This is where risk management comes into place. Now I’ve talked about exit strategies and it is very possible to look for breakouts, and set a 8% stop loss, and follow with a 25% trailing stop, and taking profits when up 20%, IBDindex has shown, and swapping if up 20% in under 8 weeks like I have talked about. However that 8% is still often times allowing a stop greater than you need. And if it’s a “mental stop”, you could end up getting hit a lot worse. Option addict has taught me to buy at support and to enter a trade as close to the exit point as possible, and to manage risk using Technical Analysis.

I want to be able to develop my chart skills, so I have decided to make a habit of looking these stocks over, and recognizing those near support, or their breakout point. What I have just finished doing is adding these names to a watchlist. when a stock sets up, when a sector shows strength, and when I need some long ideas, I can use the watchlist to find some names on my own. I might first list the list in it’s entirity, and then list out of that list, which qualified based on how far away they are from support or breakout.

I will continue to add IBD 200 names to watchlist every week. Stocks that have 50% targets and higher, will tend to be high growth high momentum names that can really take off once they get going. Even if they fall in the future, I believe many of them will still have the potential to breakout huge if they can set up and breakout, so this will be a long term watch list that I will build. Now when I see a sector breakout, I can look at the names in my watchlist, knowing that they can move aggressively and have a lot of potential.

In the future I will probably come up with some other ways to screen down the list. Perhaps I’ll exclude all of the names not in the top sectors, and look for a higher target like 75%, and only trade if it is breaks out of a base on increased volume. If anyone has any ideas, I would be happy to hear. I intend on refining this process. Perhaps I’ll get a subscription to something like and narrow down the list to those with a 1 or 2 zacks rating, or to vector vest and find those with the highest VST ratings (value saftey timing).

But for right now, I just want to get the general idea out there, and the original list I came up with. One thing to watch out for, is that many of these stocks have not broken out yet. They have a price target, but have not cleared their breakout. So perhaps manually scan the list.

This screen gave me 54 names, which is more than I thought I would get. I was hoping for around 20-30 as a starting point. Having more names then needed is a good thing. It should allow people looking for longer term holds the chance to look at a 5 year chart (and after glancing at some of them, some look very good), while others may look at a shorter term trade. It gives you flexibility to choose stocks based on your strategy, and identify good the stocks in that list that are in the best sectors.

Without further ado, here is the list.

GMXR, MOS, ARD, DNR, MEA, CAM, WTI, PXP, XCO, ROSE, TITN, BTE, CE, NETL, ANST, AME, FLIR, OFI, GIFI, NR, WG, PSEM, GSI, NGS, ARG, KSU, VQ, NVEC, AIMC, WGOV, HIL, GPOR, IIVI, AMED, HAL, HAS, SHS, COG, FPP, APWR, CXG, MCF, OLN, HIMX, EZPW, RBN, SYKE, APH, MSCC, PCTI, IPI, HLX, RDC, GTLS.

I then decided to include only those with a zacks rank of 1. #1 zacks ranked stocks basically represent the top 5% of stocks in terms of earnings and estimate revisions. More info on Zacks Rank. By doing this, I am finding stocks that will usually perform well over the next 1-3 months. That gave me only the following

GMXR MOS ARD MEA WTI PXP CE GIFI GPOR SYKE ROSE HAS COG However, HAS and COG have zacks HOLD reccomendation, which means they are not as worth owning over a 6+ time horizon. ROSE had no zacks reccomendation, and the rest all had BUY rankings. So now the list looks like this

GMXR MOS ARD MEA WTI PXP CE GIFI GPOR SYKE (ROSE)

Then if you really want to screen it down MOS(canslim), ARD(CANSLIM), were the only 2 left that was in an IBD canslim list, and WTI was the only one in an IBD accelerating sponsorship (screen of the day) Of those 3, MOS is the only one that has already broken out, according to stockcharts.com, however, MOS has the lowest expected % gain of the 3. All 3 of these names are also in strong sectors.