CSP Scan List for Monday, October 22

.
If you are on the blog page in a web browser from a computer, please subscribe to this using the "Follow by Email" link to the left.  If you're on a mobile device you should see something in the frame that allows you to subscribe.  Having your email helps me to notify you when Google mucks up email distribution.

~~~~~~~~~~
Administratia:

If you haven't read my update to the Twitter alert status, please do so.  The link is here:  https://greekgodtrading.blogspot.com/2018/10/update-on-twitter-csp-alerts.html

My real-time trades, specifically for the account that I trade my CSPs and CCs, are echo'd to the Twitter feed so you can see what I'm doing.  #NoHiding #FullTransparency

The alerts files (monthly historical as well as the alerts generated as of the last trading day, after market open), are available here ( https://goo.gl/WbuJhS ).  The archive subfolder contains historical alerts files that you can review.

Real-time Q&A with me, if I'm available, is through this link:  https://discord.gg/4QAUqyd This is Dr. Jeffrey Scott's HGSI Discord forum and it's worth your time to join (free).  I am @PaulDuncan at Discord and I typically watch the #cashsecuredputs-n-coveredcalls channel.  Come say "hello"!

~~~~~~~~~~

CSP Source List for Monday

The lists today are incredibly thin, which is an outcome of my screening processes.  The lists are published here at https://goo.gl/XZKgwY   

Going forward, the lists will expand/contract in relation to four primary criteria:

1. Does the stock have increasing revenues, earnings per share, and free cash flow on a QoQ, YoY, and TTM basis?  Only select stocks where the answer is yes.
2. Is the stock price above the 50d MA?
3. Are the 50d MA > 150d MA > 200d MA?
4. Is the individual candidate equity emerging into a new uptrend on the daily and/or weekly time frame?

The first item is simply my definition of a quality stock.  Substitute your own definition as necessary.  For those of you who have been with me over the years, this is the "Greenfield Criteria".

The next two items are simple filters that really do have a material change on long-term performance.  I've tested the heck out of these two conditions and I am 100% convinced that independent of the numbers (e.g. 50d, 150d, 200d), these two conditions reduce drawdown and provide a natural block to entering the markets in stocks that are bottom swimmers (bottom swimmers are terrible CSP candidates).

The last criteria is relatively new and was developed as a result of wanting to have fewer stocks assigned to me.  Basically, having a stock in an uptrend is not sufficient -- the longer the uptrend, the more sensitive it becomes to any market weakness, causing the price to drop (sometimes rapidly drop).  Hence, my intention is to enter into positions that are newly emerging and that have defined risk points below the entry level.

~~~~~~~~~~

Market Climate

From the CSP perspective, the broader market is still in a downtrend, and even if Monday is a majorly up day, several things need to change in order to have confidence to move into long positions (or sell CSPs).

My favorite crystal ball is the Cumulative Tick.  If you are not familiar, this is a good starting point:

https://traderfeed.blogspot.com/2006/09/cumulative-nyse-tick-valuable-measure.html

I've modified the presentation, but the approach is the same:

Click on the image to enlarge

Three plot areas are shown; here is what you are looking at:

1. Top plots.  Daily 52-week New High/New Lows.  Red is the New Lows, and as you can see by my circles, far more stocks are making 52-week new lows relative to new highs (green).  This is not an expanding market -- it is contracting.  Contracting markets are not conducive to selling CSPs.
2. Middle plots:  Daily "sustained filter" of the real time cumulative tick.  The filter here is that the cumulative tick must be ticking higher or lower, on a net basis, minute-over-minute in the same direction in order to move higher or lower.  When the line is flat there is not buying/selling pressure.  When the line trends up (like last Tuesday), there is strong buying pressure.  When the line trends down (like last Thursday), there is strong selling pressure.  As you can see, Friday was net down, but not overly strong.  It started slightly bullish in the morning and became weaker as positions were unwound, most likely to reduce risk into the weekend.
3. Bottom plots. Real-time cumulative tick and moving averages.  The RT CT is white, the solid heavy red line is about a 10-day moving average.  When both are trending down we haven't hit the floor, so going long when this is occurring is really risky.  Selling CSPs before this bottoms is also really risky.

So, the lack of deep lists to alert on, and the downward push of the CT tells me that sitting on the sidelines today is not a bad risk-mitigation approach.

I do have some existing positions that I need to manage so you will see that activity through the Twitter feed.

~~~~~~~~~~~

As with all my ramblings, you are responsible for your own investment/trading decisions and I am not.  Please do your own diligence, and please take ownership for your actions.  Please read and acknowledge the disclaimer that is listed on the left on the web site page.

Regards,

Paul