Bullish, Bearish, Perplexed, Doesn’t Matter — Stay In Shape

Item 3 (I know it’s out of sequence, please bear with me): Evaluating Individual Stocks

Just keep doing what you always do when you examine an individual company. 

Item 2: Screening

There is no single correct way to screen based on the above-discussed ideas regarding desirable stocks (in fact, there’s never a single correct way to screen for anything). 

There are many good stocks to match any goal and its okay if you find A, D, E, F and Q while I find C, D, F, R, and W. Back when I used to do screening presentations to investment groups, one of my slides said “Thou shalt not covet thy neighbor’s stocks.” If your stocks are working, be happy and keep doing what you do. If your neighbor is also doing well with different stocks, both of you be happy and congratulate each other. Just don’t get hung up on replicating anybody’s specific set of rules. Use the screens suggested here, a template you can copy completely or subject to your own fine tuning, or use as a springboard for coming up with your own variations.

Marc Chaikin’s screening rules:

  • Universe is S&P 500.
  • Long-Term Debt to Equity Power Gauge factor ranked Bullish or better.
  • Earnings Growth Power Gauge factor ranked Bullish or better.
  • Industry Group Strength Power Gauge factor ranked Bullish or better.

Dan Russo’s screening rules:

  • Universe is Russell 3000.
  • Overall Power Gauge rank is Neutral +, Bullish, or Very Bullish.
  • Long-Term Debt to Equity Power Gauge factor ranked Bullish or better.
  • Free Cash Flow Power Gauge factor ranked Bullish or better.
  • Chaikin Money Flow indicator is Strong.
  • Chaikin Relative Strength indicator is Strong.
  • Minimum Stock Price is $10.

My screening rules:

  • Universe is Russell 3000.
  • Overall Power Gauge rank is Neutral +, Bullish, or Very Bullish.
  • Long-Term Debt to Equity Power Gauge factor ranked Very Bullish.
  • Return on Equity Power Gauge factor ranked Bullish.
  • Earnings Consistency Power Gauge factor ranked Bullish.
  • Return vs. SPY in latest month is up 2% or more (Note: It’s okay if stock is down, as most are. I’m looking for stock return compared to SPY return).
  • Chaikin Money Flow indicator is Strong.
  • Chaikin Relative Strength indicator is Strong.
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