TreadingScreen Explanation (v2)
What is this?
The TreadingScreen is a weekly list of tickers that meet a set of criteria based on a particular technical analysis (TA) setup. The list of tickers is automatically generated from a program created in the “R” coding language. The program analyzes the price action of all stocks currently listed on either the NASDAQ or NYSE. In total, more than 8,000 stocks are analyzed on a weekly basis. As a general note, all micro/small cap companies are currently eliminated from consideration.
The criteria aims to find tickers with price action near all-time highs and/or in a strong uptread (Figure 1). The objective is to share this shortlist of tickers and document its performance relative to the general market (e.g., - $SPY).
Figure 1: Example chart output from custom stock screening program
Black line = weekly close prices (adjusted)
Blue ribbon = weekly high & low prices (adjusted)
Solid purple = 40 week SMA
Dashed purple = 30 week EMA
Horizontal lines = historical resistance levels
In addition to the full TreadingScreen, a subset of tickers is manually selected through additional criteria:
Manual interpretation of the best TA setups
Eliminate tickers with upcoming earnings dates (typically a lotto play)
Additional DD/FA (company news, financials, macro effects, etc.)
The tickers remaining after considering the above make up the TreadingSelect and, typically, buy orders placed for a swing trade in the portfolio.
Figure 2: The differences between TreadingScreen and TreadingSelect
The objective of the TreadingScreen is to outperform the general market and, ideally, the TreadingSelect should have the best performance overall.
Performance Assessment
The TreadingScreen is generated on the weekend of a particular calendar week (CW“XX”) and its performance monitored during the following week (CW“XX+1”). The TreadingScreen weekly performance will be quantified via combination summary of:
Line graph of daily closing prices
Boxplot of each ticker’s weekly closing price
$SPY’s benchmark performance will always be included in the line graph in red. The boxplot also includes the mean performance of all tickers (large orange circle) as well as $SPY’s performance (large blue diamond). The boxplot will be useful in the event many TreadingScreen tickers are generated (creating an overcrowded line graph).
Figure 3: New performance summary format.
How to Interpret
The goal of the TreadingScreen is to outperform the general market (e.g., - $SPY). A good result would be if the median and/or mean returns are higher than $SPY’s. As can be seen above, CW25’s TreadingScreen experienced higher returns throughout the week and at week’s end.
Lastly, the TreadingSelect is intended to be a higher-performing subset of the TreadingScreen and verified actions and performance will be documented weekly via Commonstock.com.
Example screenshots that will be shared whenever an update is warranted: