In the results from a scan shows CLWR in a consolidation from price action, but MACD is moving high, something that cannot be detected by simply looking at the price chart alone. The trend has steadily gone up while the Stochastics reading is below 20, this is right time to watch it carefully. Once the Stochastics line begins moving up (usually by a price moving higher and closing higher than previous day), then an entry will be taken.

Figure 2 shows a MACD about to turn up and Stochastics reversing toward overbought.

This stock seems a bit thin but it met the scan’s criteria. If taking a look at the chart, one can see the divergence taking place between price action and the MACD seen from late August to beginning of November. This is the first clue that the stock is changing roles soon. There maybe some accumulation taking place in a very discrete way. Back to the last bar to the right, the MACD is now turning up again and Stochastics is moving up along with the big price spike and closing at the high, this is a positive price action. The momentum is starting to pick up steam and the moment is right for a long entry. Be sure to set a stop loss order.  

Figure 3 shows MACD moving higher with Stochastics turning upwards from oversold.

PGIC is trending down, this is clearly a downtrend. It’s recommended to follow the trend. But in this case, if the long is taken, it’s a counter-trend trade: a very risky trade and requires bigger nerves of steel and a different perspective to take it. However, it’s possible the stocks sellers are near exhaustion, with the prices decelerating.  Stochastics is turning up from oversold and MACD has been moving up while prices continues down: a divergence. So the trade might have a good chance, but make sure the stop loss order is place to avoid being wrong BIG.

For short scan, here’s the formula:

VOLUME1  > 100000  AND MACD15_1 < MACD15_5 AND STO12_K  > 80 AND IQC_1=1

Combining the timing and trend indicators and using price action to confirm them will increase the probability of a trade going the right way. Finding the trend and then finding the right moment to enter is the essence of a winning strategy. This scan will help identify those stocks that are ready to move.