A method for creating a watchlist

Stephen Cole
Co-Organizer Sacramento/Davis IBD
Meetup
Amateur investor

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 What I use

• eIBD
• MarketSmith
• eTables
• Leaderboard
• www.investors.com
• excel

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 Am I right?
• The methods I utilize came from more experienced investors. I use
what other master traders do.
• If an experience trader says liquidity should be greater than $10M
per day, that’s what I use.
• I have not back tested.
• I have a full-time job.
• I try to be consistent with the approach and do not change metrics
or approach week to week.
• I am attempting to learn and conquer HTTMIS.
• I continually read the HTTMIS group of texts.
• My WL routine takes approximately 2 hours per week. I think if you
don’t have 2 hours per week to invest, you should not be trading
yourself.

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 Goals
• To cut the ~8000 stocks into a manageable list of stocks
with tip top fundamentals
• To assemble a watch list each weekend
• To keep track of the process
• To leave an audit trail
• In doing the above, attempt to be time efficient and as
automatic as possible
• If a stock makes my WL, I buy if the BP is reached.
• Can use manual orders, or enter Buy Stop/Buy limit orders
with the broker
• Download eIBD each issue and save, so I can go back 3-4
years to view an issue in the audit period

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 Do what you do
• Each of us is brilliant, or not
• Each follows their own path
• Each can use my system, and come up with different watch list
candidates
• Do what is comfortable
• Do what allows you to sleep at night
• I have a full-time job so I need to be as mechanical as I can
• Listen to Lee Tanner’s national show, which suggests having rules
• Follow your own rules, even if you have not back-tested
• Do not watch the talking heads
• Be careful of blogs/listserves. The danger is that you will be like a
one-eyed dog in a meat market. Stay focused on your watch list

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 Create omnibus list (10-15 min)
• In excel
• Collect only symbols. No data needed at this
point.
• Sources:
• eIBD:
• Your Weekly Review

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 Additional Sources
• From MS eTables and Leaderboard:
• LB
• IBD 50
• IBD 85/85
• Top IPO
• Many others are available in MS but these are
the ones I use

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MS Screens - WON

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MS Screens – Super Stock

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MS Screens – Growth 250 modified

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MS Screens – IPO w EPS

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MS Lee Very Tight

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MS Lee – Accelerating

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MS Lee – High ROE+PTM

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 Sources - MS Screens (5 min)
• From MS screens:
• Modified:
• William O’Neil (standard MS)
• Created, with thanks to those on whose shoulders I
stand:
• Super Stock
• Growth 250
• IPO with EPS
• Lee Accelerating
• Lee Very Tight
• Lee ROE PTM
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What to do with omnibus? - 2 min
• The list is my population for watch list creation
• It has duplicates/triplicates
• I can get a feel for the total numbers, but
keeping track weekly of how many stocks are
on the list. Generally between 600-700
• Copy the symbols into a new MS List, labeled
2014 8 8 Omnibus (this naming format allows
easy searching)
• MS eliminates duplicates, generally ~300 left
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Omnibus history

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 MS Power form
• MS allows us to create columns in whatever
order we want
• My Power xls will not work unless the
identical MS fields are selected
• I have additional fields in the Power.xls that
massages MS data
• Unless the MS columns are in the same order
and identical to mine, the Power xls will not
work
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 Then what? (2 min)
• Select my Power form columns in MS
• Export list to excel.
• Copy columns into the power form xls.
• See how many stocks pass my criteria

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What excel will look like

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 My criteria in columns
• Group rank A
• Sales last qtr E
• Current qtr F
• Eps last qtr G
• EPS 2 qtrs ago H
• Current year EPS I
• ROE PTM total J
• Liquidity K

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 My criteria
• Current quarter EPS >20%
• Annual quarter EPS>20%
• Sales growth recent quarter >15%
• Liquidity of $10M per day (price x 50 day avg
volume)
• Industry Group rank < 40 (old rule, I now have no
minimum)
• Different combinations of Return on Equity + Pre-
Tax Margin depending on EPS (the lower the
ROE+PTM the higher the EPS requirement

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 Then (5 minutes)
• Export symbols to new MS list 2014 8 1 Six Pack
• I use two monitors, the one on the right for MS,
the one on the left for excel with Power 2014 8 1
open.
• I tab through the weekly charts on those that
made my criteria, to see which have buyable
bases.
• I have column X for my notes. E is the default, for
“extended”. That to me means it is not a buyable
base
• I flag those with buyable bases
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Use cheat sheet to examine bases

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 Tab through each weekly chart again
• To more closely examine the buyable base
• www.investors.com for articles
• www.investors.com new enhanced quote page is
chock full of good info, all on one screen
(http://research.investors.com/quotes/nyse-
vipshop-holdings-ltd-ads-vips.htm?fromsearch=1)
• Go to earnings site for earnings history, notes
• Make notes in column X for audit

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 Why notes for audit?
• For post analysis and look back to see why a
stock was, or was not, on my watch list
• In particular, note the specific reasons I did
not include a particular stock
• It eliminates emotion if I have a reason

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Copy into Comparative Worksheet
• Enter symbol in column E in cel E2
• Enter buy point (pivot) at E13
• B1, B2 and B3 will be calculated
• Relevant metrics are in red and green
• Examine
• Enter buy point/alert in brokerage

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Top portion of Comparative

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Bottom portion of Comparative

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 IPO Power excel
• My usual liquidity minimum is $10M per day
• I was concerned about missing an IPO whose
liquidity did not meet that minimum but still
be buyable if in an IPO base
• I created a second power excel, eliminating
the liquidity requirement, but leaving the rest
of the criteria in place

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 Learn from the best
• Continue to follow your routine,
• Keep reading IBD materials,
• Keep listening to experienced investors like Lee
Tanner, Mike Scott, and others on the IBD radio
show
• Check out files posted at leading IBD meetup
sites, such as Petaluma, Thousand Oaks, Marin
and San Francisco
• If questions, email me at
[email protected] and I’ll try to get to each
one
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 Goal
• 25% gain/7% loss or
• 20% gain/5% loss or
• 15% gain/4-5% loss
• Hold for 40 trading days, even if goal is
reached
• If 5 positions, and each turns over 4 x year,
then 40% to 60% quite doable

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 What I use

• eIBD ($269/yr)
• MarketSmith ($999/yr)
• eTables ($139/yr)
• Leaderboard ($699/yr)
• www.investors.com (no cost)
• Excel (most people have)
• Total: $2106

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