How To Identify Strong Uptrending Stocks

Nick

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The Scan For Long-Term Uptrend On Monthly Chart
Shared Scanner Link: http://tos.mx/qfmSDwG
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@Nick :)
Hi @MerryDay

I like to build on this scan list to filter stocks using fundamental analysis to find stocks that growth potentials. The criteria for growth stocks that I like to consider are accelerating EPS growth for 3 quarters(as long it is increasing), sales growth at least 15% per quarter and if possible after tax margin to be accelerating as well.

https://usethinkscript.com/threads/scanner-based-on-the-canslim-conditions.4851/post-71596

I have found this thread that shared how the EPS growth can be configured but I am wondering if there is any way within thinkorswim scan we can scan for sales growth or something close it it.

It will be great if these two conditions can be added to your long term uptrend scan and that may give us better candidates to select.


Thank you.
 

Nick

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@MerryDay Hi, may i know what is the difference to scan in "All Listed Stocks" vs "All Stocks"?? I am confused becos I presumed "All Stocks" in the exchange must be listed...

I like the uptrend scan but it is better for me to understand what is serve to help us.
Can u help me to confirm if my interpretation for the ADX/SMA is correct?
This ADX/SMA scan filter finds stocks when both the ADX >30 with Close > AVG50 conditions are valid within the 5 monthly candles?? The reason ADX 30 is chosen is because it has uptrend momentum??

#ADX/SMA trend
def ADXLength = 5; #TOS default 10
input AverageType = AverageType.HULL;
def AvgLength = 5; #TOS default 8
def ADX = Round(reference ADX(length = ADXLength), 0);
def avg50 = MovingAverage(AverageType.SIMPLE, close, 50);
plot scan = ADX > 30 and close > avg50 ;


For PSAR, the filter is
"close is greater than ParabolicSAR acceleration Factor 0.02 n acceleration limit 0.2"

acceleration factorThe initial value of the acceleration factor.
I have found the definition of the acceleration factor, but don't quite understand how does this value affect the scan result? The greater the number the stronger the trend??

Can I request your help to explain what kind of stocks does this filter help us to find?

Thank you
 

MerryDay

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The ADX / SMA Filter
The Average Directional Index (ADX) does not indicate trend direction or momentum, only trend strength. ADX is often used to identify whether the market is ranging or starting a new trend.

ADX will range between 0 and 100. Generally, ADX readings below 20 indicate trend weakness, and readings above 40 indicate trend strength. An extremely strong trend is indicated by readings above 50.

Combine ADX with a trend indicator (SMA, EMA) identifies whether the equity is trending up or down.
When using on a long-term chart this signals that there is a strong uptrend.
In use in a scanner, it would be important to get a positive signal on the current candle not within the last 5 candles...
@Nick
 

MerryDay

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@Nick
Parabolic SAR
If price has just penetrated the SAR or is not far above it. It indicates the beginning of a trend. PSAR has a high failure rate in sideways markets so must be paired with indicators such as the ADX / SMA.

PSAR acceleration factor
AF is the acceleration factor which is initially set to a value of 0.02. Traders can choose the acceleration factor depending on the tradings style or instrument being traded.
The equities that I have typically been trading have never required me to change the AF.
 
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Nick

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The ADX / SMA Filter

When using on a long-term chart this signals that there is a strong uptrend.
In use in a scanner, it would be important to get a positive signal on the current candle not within the last 5 candles...
@Nick
Thanks for the prompt response. Do you mind to explain this part "important to get a positive signal on the current candle not within the last 5 candles..." ? how can we identify a positive signal on the current candle, is it by another indicator?
 

MerryDay

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@Nick When looking at Long-Term charts, overall trendline is important that is why the mthlytrend indicator looks for a consistent uptrend.
As a compliment to the monthly trend indicator, the ADX/SMA and the PSAR look at the current month (or previous month, for the less risk-adverse) to gauge the current strength and direction.
 
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tjlizwelicha

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@Nick When looking at Long-Term charts, overall trendline is important that is why the mthlytrend indicator looks for a consistent uptrend.
As a compliment to the monthly trend indicator, the ADX/SMA and the PSAR look at the current month (or previous month, for the less risk-adverse) to gauge the current strength and direction.
@MerryDay Thanks again. I am really learning from the site. How do you determine/strategy how far out to purchase a contract?
 

rad14733

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@MerryDay Thanks again. I am really learning from the site. How do you determine/strategy how far out to purchase a contract?

Your DTE selection is somewhat dependent on your trading style and risk tolerance... For scalping and day trading options many traders use weekly options having a DTE of 5 - 7 while others may trade right up to the day of expiration... For swing trading you might go out further and for long term, even further yet... There are many factors to take into consideration when it come to options compared to stocks... There are many many YouTube videos that cover virtually every aspect of options trading...

Also, as you'll discover by watching the videos, you'll see how traders use different strategies... I, personally, only scalp and day trade weekly Calls and Puts... Others trade credit spreads, straddles, strangles, iron condors, etc...

Do some research and if you have specific questions we'll do our best to get you answers...
 

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