Screen Of The Week : Using Common Sense
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However, once you're in (or watching potential candidates), it doesn't mean your work is over.
Whatever your stocks are, don't stop monitoring the fundamentals.
If one of your initial criteria for getting into a stock was that it had a low Debt-to-Equity ratio, but you then saw that ratio change to an unacceptable level, you should consider exiting and looking for a new stock to replace it. One that currently does meet your criteria.
Let's say, for instance, that you use the Zacks Rank as a timing indicator and you look at the Zacks #1 Rank list for immediate movers. If in a few weeks, as Zacks aggregates EPS Estimate Revisions, the prospects for the company's earnings deteriorate and is degraded to a Zacks #3 Rank or Zacks #4 Rank, take note and consider dumping it.
Sure it was a Zacks #1 Rank, but it's not anymore.
If you never would have gotten into a Zacks #3 Rank or a Zacks #4 Rank in the first place, why would you now want to hold onto one'
That's using your common sense.
What if you're a momentum investor and you generally look for stocks trading within 10% of its 52 week high and it suddenly falls below that level? Well, if you're only interested in focusing on stocks within 10% of its high and it's now 15% or 20% (or more) off its high, ... move on. The momentum has seemingly shifted and so should your focus.
Also, don't convince yourself to hang onto losers either. If you got into a stock expecting great things and it's now against you, get out. Don't let your love of a stock (or denial) ruin your portfolio. Almost every big losing trade anybody has ever had in their portfolio could have been exited when they were just beginning to crumble.
And if you get out and it zips back up, you can always get back in if you want. But if it keeps going down, you're just losing more and more money.
So once you've found the items that have proven to work well for you in picking profitable stocks, be sure to monitor those values. And if they no longer meet the winning criteria, get rid of them fast and find new ones that do.
The Research Wizard's backtesting feature is the best way to do that! Backtest your strategies to see what works and what doesn't.
Here are three new stocks that look great and that are currently coming up on some of our best screening strategies.
CE Celanase Corp.
(from the Upgrades and Revisions2 screen)
CPWR Compuware Corp.
(from the Value Method1 screen)
GLT Glatfelter
(from the Increasing Cash Flows screen)
Remember, the key to successful screening is in discovering those screens that have produced profitable results in the past. That's exactly what you get with the powerful Screening and Backtesting ability of Research Wizard.
Take note: Backtesting isn't available in all screeners (in fact it's rarely available in any screener), but it is available in the Research Wizard.
So sign up now for your free trial to the Research Wizard. Pick and choose from some of our profitable strategies or put your own ideas to the test and start making better decisions today.
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