FAQ
-
Frequently Asked Questions
about Robert's Weekly Watch List |
Is
this advice?
 NO!
- This is definitely not
advice of any sort. We do not have an AFS License, nor does he take
your personal financial situation into consideration. So there is not
way that this information can be advice.
This
information is for
education only.
There is NO recommendation here to buy or sell and stocks, nor any
other
sort of investment.
You
should always seek suitable advice from
a properly qualified
professional licensed advisor
before making any investment decisions.
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CAUTION!!
It can be said that any investing or trading strategy might be
successful for one person, but not successful for another. This is due
to a number of reasons, including one's own risk tolerance and
psychological make-up.
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Is this a
list of Hot Stock Tips?
Robert's Weekly Watch List might look like a list of
Hot Stocks, or it might look like a list
of Stock Tips
- what to buy and what to sell. But it is not this at all. Robert might
treat the list in this way because it suits his purpose, his strategy,
and his investing risk tolerance.
So, what
is the purpose?
Robert's Weekly Watch List is being shared as a sample
application of how to use technical analysis for selecting possible
investment
opportunities. By following the links, and understanding the concepts,
we can see the investing and trading strategy being used.
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Executive
overview (ie. Brief summary)
- We start off with a list of preferred stocks.
- Once each week on a Friday night we "scan" the preferred
stocks to identify
those that meet certain selection criteria.
- If a stock mets the selection criteria, then it is
included on the Weekly Watch List.
- And the stocks on the Weekly Watch List
are all
allocated a Score.
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Preferred
stocks - Which stocks do we select from?
For this "Weekly Watch List" strategy we are looking only at Australian
listed
companies. We want to minimise the risks - so we exclude speculative
stocks. When
we decide to exit a position, we will want to be able to exit the
position quickly - so we will avoid illiquid stocks (ie. stocks which
don't trade frequently enough, or which have very low turn-over).
Stocks
with relatively high debt levels have a greater risk of defaulting on
their debt when times are tough - so we will avoid these stocks as well.
For
now, the simplest way to achieve all the above is to use the stocks
that are included in a major index like the S&P/ASX 200 (ie.
the
XJO). For a longer list of stocks we could apply Funda-Technical
Analysis and select from all stocks. [By the way - Which
stocks are in the XJO index?]
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Selection
criteria - Rising Trend and Moving Averages
The criteria that we use here to put a stock onto the Weekly
Watch List is based on the notion of a rising Moving
Average. This is one way to quickly spot a rising trend -
more details on trend-spotting
here. In fact, for this strategy we look for two Moving
Averages to both be rising for 3 weeks. The sample chart at right is a lovely example of a
healthy rising trend (click on the image for a larger version in a new
window). Note how much this share has risen in price, and over what time period - not bad.
But which two Moving Averages do we use? - See the details in the
Premium Member section of the Toolbox.
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Trends
- "The Trend is Your Friend"
The first
plank of our stock selection strategy is the notion of a rising trend.
If we can spot a reliable rising trend in share price, and then ride
the trend, then we are at least half way there.
See Brainy's "3Ways
Rule (in 3Times)" for information about trends,
as well as more details on the Trends page.
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The
score
Each of the stocks that is chosen to be included on the Weekly
Watch List is allocated a Score. This
score is calculated as a part of the BullCharts scan, using the
BullScan
criteria, and each scan criteria is assigned a "weighting". A stock
that
meets all criteria ends up with a "Score" of 100 out of 100. If a stock
does not meet some of the criteria, it's "Score" will be less than 100.
If a stock meets none of the criteria, then it is not on the list at
all.
The details of these scan criteria and the score calculation
are available to Toolbox Premium Members
here. There are some clues in the next
section below
"Tell me more about...".
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Tell me
more about this Investing and Trading Strategy
The complete and detailed Investing and Trading Strategy
that Robert uses with this Watch List approach is explained in detail
across several of Brainy's eBook
(PDF) Articles.
Anyone can view the first page of each Article, but only Toolbox
Members (and Premium Members) can view
the Articles in full. (And Robert actually has other strategies to suit
different circumstances.)
Relevant Articles and links for Toolbox Members
(non-Members can see the "Page1" items):
- Investing and Trading Plans and Strategies
Article ST-6405, "Robert's
Weekly Watchlist" (page1 here).
This
article includes the case study Trading/Investing Plan, and Trading
Strategy, using the templates from the following articles:
- This Watch List Strategy
Article TA-6050, "Robert's
Weekly Watchlist
Strategy" (page1 here).
This article talks
about money management and risk
management, and the stock selection criteria in terms of technical
analysis. That is, rising Moving Averages, the ROAR, a rising MACD,
Momentum, and the exit criteria (Wilson ATR Trailing Stop).
- BullCharts selective stock filtering
Article BC-10-400, "Scans
-
Match (not) all criteria" (page1 here).
This article includes a discussion and demonstration of how to use the
BullScan weighting factors to get a "Score" for each selected stock.
- The ROAR value:
- Article BC-26-200, "Author
Strategy - Alan Hull (and
ROAR)" (page1 here).
This 8-page article covers a number of topics including: the Alan Hull
ActVest and ActTrade strategies and indicators that are included in
BullCharts; ROAR; ROAD; the Range+ indicator; Hull MMA indicator; the
relevant BullCharts market scans and templates; and Brainy's own very
useful BullCharts template to display the Range indicator on a weekly
chart with the daily candles superimposed.
- MACD indicator
Article TA-4230, "MACD
- Moving
Average Convergence
Divergence" (page1 here).
This 7-page article includes information on the MACD indicator, and the
MACD Histogram, as well as the notion of MACD Divergence.
- Momentum indicator
Article TA-4610, "Momentum
Indicator" (page1 here).
This article discusses the Momentum indicator, and also
discusses the notion of a Moving Average of Momentum (using 28-periods).
- Trailing Stops and the Wilson ATR Trailing
Stop
Article TA-5100, "Indicators
and
Tools for Stops" (page1 here).
This article
includes information on: Count Back Line (CBL), the various indicators
that can be used for stops (eg. P-SAR, JB Trailing Stop, ATR Trailing
Stop, etc.); and a discussion of the Wilson ATR Trailing Stop. Also see
the Presentation slides "Seven
Ways to Determine a Stop Loss Position", or a
more basic
introduction "Stop Loss - Introduction".
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Is
this information reliable? Has it been tested?
A specific stock selection strategy has been used to identify the
stocks to appear on this Watch List. This strategy has been back-tested
using BullCharts
and TradeSim over specific date ranges. The results of the back-testing
are being prepared and will be available here soon.
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Please
send me
the Weekly Watch List each week
We are happy to send you the Weekly Market Analysis
email each Saturday, which includes relevant comments and the links to
the latest Weekly Watch
List table.
To get this, all you need to do is subscribe
to Brainy's Share Market Toolbox as a Premium
Toolbox Member - more details are
here. See the How-To-Join
information with
details about how to become a Toolbox Member. Not convinced about
Toolbox membership? See the
reasons why you should join.
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How is the
Watch List information prepared?
 All of the charts and the
watch list results are produced
and derived using the
Australian BullCharts
charting
software.
The market is scanned using the BullScan tool with specified
selection criteria, and price charts with indicators are viewed using
the BullCharts software as required.
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The columns in the table?
The columns in the table include:
- The stock code (eg. BHP) and stock name.
- ROAR value.
- Close price at the end of the week.
- Two possible Trailing Stop positions.
- The number of consecutive weeks that each stock has
been on the Watch List.
- The percentage change in price since first appearing
on the Watch List.
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The sort sequence for the rows in the
table?
The rows in the table are firstly grouped into three categories:
- Stocks that are new on the list this week.
- Stocks that were on the list last week.
- Stocks that were on the list last week; but are gone
off the list this week.
Then within each of these three groupings, the stocks are sorted as
follows:
- By SCORE, so those with the highest score of 100 are
at the top of the list.
- For any stocks with the same SCORE, they are simply
sorted by Stock Code.
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What? Some
of these stocks are losers?
Yes, some of the stocks on the Watch List will lose money. That's one
of the facts about investing and trading.
BUT, with proper "money management" we can still come out in front!!
This is because if wewe cut our losses short, and let our profits run,
then the accumulated profits should be greater than our losses.
Even if we have a win to loss ratio of 50%! That is, if we have 5 wins
and 5 losses, we can come out ahead provided our profits are larger
than our losses.
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Why is a
stock "off the list" if the WATRTS is not broken?
Our selection criteria says that to be "on the list" a stock must have
two specific moving averages increasing for the last three weeks. Now,
it is possible for one of these moving averages to stop increasing
for a week or two, because the share price is taking a "breather"; but
for the price to stay above our Stop Loss level. And the price can then
continue to rise, and cause both moving averages to rise again.
So, why don't we fiddle with the selection criteria to keep these on
the list?
There are two reasons: The stock might be showing early signs of
weakness, in which case we can monitor the stock and be on guard in
case of a pending fall. Secondly, a temporary sign of price weakness
might be an opportunity to enter the stock again at a cheap price.
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Some
stocks on the list do nothing for the first few weeks - Why?
This observation is a common occurrence with stocks that break out
above resistance, of from a recent trading range. It can often be seen
in different time periods (on daily charts, or weekly). The stock
breaks out, but some people want to recoup their investment at these
recently high prices so they sell, and with the excess of sellers in
the market the price falls away. But once these sellers are gone from
the market, then only the buyers are left to take the stock on to
higher highs.
When they fall, the stock can even fall lower than
anticipated; but it can stop falling at a recent support level which
might be the bottom of a recent trading range. A picture tells a
thousand words, and this is one it is useful to view the price chart.
This process can take several weeks to unfold.
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 Toolbox Members
area?
More
information about the TOOLBOX MEMBERS AREA.
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The
Weekly Watch List Table 
