{"id":4440,"date":"2016-03-02T06:12:57","date_gmt":"2016-03-02T11:12:57","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=4440"},"modified":"2022-04-06T15:05:01","modified_gmt":"2022-04-06T19:05:01","slug":"leading-stock-scanning","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/leading-stock-scanning\/","title":{"rendered":"Why You&#8217;re Too Focused On Charts Of The NASDAQ, S&#038;P, and Dow Jones"},"content":{"rendered":"<figure id=\"attachment_4444\" aria-describedby=\"caption-attachment-4444\" style=\"width: 300px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4444\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2016\/03\/focused-300x199.jpg\" alt=\"What is your stock market focus?\" width=\"300\" height=\"199\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/03\/focused-300x199.jpg 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/03\/focused-110x73.jpg 110w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/03\/focused-768x509.jpg 768w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><figcaption id=\"caption-attachment-4444\" class=\"wp-caption-text\">What is your stock market focus?<\/figcaption><\/figure>\n<p>In last week&#8217;s blog post, we showed you <a href=\"https:\/\/www.morpheustrading.com\/blog\/best-stocks-march-2016\/\" target=\"_blank\" rel=\"noopener\">six stocks with relative strength<\/a> and the potential to show leadership <em>IF<\/em>\u00a0overall broad market conditions started to improve.<\/p>\n<p>Since then, the main stock market indexes\u00a0have indeed been under control of the bulls, and all the major indices are\u00a0now trading above their respective 20 and 50-day moving averages on the daily charts (a bullish signal).<\/p>\n<p>Because the NASDAQ, S&amp;P 500, and Dow Jones Industrial Average are now in rally mode, you may now be pondering whether current strength will just be a short-lived bounce off the lows <em>or<\/em> the start of a significant rally.<\/p>\n<p>But asking whether or not the major indices will continue improving is the <em>wrong question to ask.<\/em> Continue reading to learn why&#8230;<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/leading-stock-scanning\/#Do_You_Need_A_Paradigm_Shift\" >Do You Need A Paradigm Shift?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/leading-stock-scanning\/#Your_Quick_Efficient_Stock_Scanning_Routine\" >Your Quick &amp;\u00a0Efficient Stock\u00a0Scanning Routine<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/leading-stock-scanning\/#Whats_Hot_Now\" >What&#8217;s Hot Now<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/leading-stock-scanning\/#Good_Habits_Consistent_Trading_Profits\" >Good Habits = Consistent Trading Profits<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Do_You_Need_A_Paradigm_Shift\"><\/span><strong>Do You Need A Paradigm Shift?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>While you may spend several hours each week analyzing charts of the NASDAQ, S&amp;P 500, and Dow Jones Industrial Average, that valuable research time is much better spent scanning through a universe of stocks with relative strength instead (<a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">here<\/a> is a quick and easy &#8220;self serve&#8221; way\u00a0to do so).<\/p>\n<p>Support and resistance levels of the major indices\u00a0are important, but volatility can be very high at obvious levels of support and resistance.<\/p>\n<p>As such, you are typically forced to endure numerous &#8220;head fakes&#8221; in the broad market before the true move reveals itself.<\/p>\n<p>Therefore, focusing primarily\u00a0on charts of the NASDAQ, S&amp;P, and Dow as broad-based\u00a0market volatility increases\u00a0frequently leads to getting\u00a0&#8220;shaken out&#8221; of\u00a0your positions.<\/p>\n<p>If this regularly happens to you, it&#8217;s <em>time for a <a href=\"https:\/\/study.com\/academy\/lesson\/what-is-a-paradigm-shift-definition-examples.html\" target=\"_blank\" rel=\"noopener\">paradigm shift<\/a><\/em> in your trading mentality to focus more on trade setups of leading individual stocks, rather than the main stock market indexes.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Your_Quick_Efficient_Stock_Scanning_Routine\"><\/span><strong>Your Quick &amp;\u00a0Efficient Stock\u00a0Scanning Routine<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>To increase your\u00a0odds of success in determining a market bottom, you need to run\u00a0through a few <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">stock scans<\/a> during the week, making a list of\u00a0stocks that are trading<strong> within 15-20% of their respective 52-week highs,<\/strong> while also forming a constructive <a href=\"https:\/\/www.morpheustrading.com\/blog\/best-stock-breakouts\/\" target=\"_blank\" rel=\"noopener\">basing pattern<\/a>.<\/p>\n<p>More specifically, you need to establish and stick to a simple\u00a0<em>weekly<\/em> routine, where the same technical stock scans are run each and every week.<\/p>\n<p>This doesn&#8217;t have to be extremely time consuming, and can be done on the weekend if the demands of life keep you too busy during the week.<\/p>\n<p>How much you need\u00a0to scan depends on the trading system being run, but one to two\u00a0hours of flipping through charts while watching a baseball game isn&#8217;t too demanding.<\/p>\n<p>Instead of\u00a0relying on just a few\u00a0chart\u00a0patterns\u00a0of the major indexes, your goal\u00a0is to start\u00a0referencing\u00a0your own individual stock watchlist for confirmation of market sentiment.<\/p>\n<p>After getting\u00a0into the habit of running through your stock scans every week, you will eventually notice the number of stocks your watchlist expanding and contracting with the market.<\/p>\n<p>If broad market conditions are improving, you should see confirmation in the form of an increasing number of<strong> stocks breaking out of solid bases to new &#8220;swing highs.&#8221;<\/strong><\/p>\n<p>If you do <em>not<\/em> see such confirmation, then be very cautious because something is amiss with the overall stock market.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Whats_Hot_Now\"><\/span><strong>What&#8217;s Hot Now<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Current market conditions are improving, but more importantly,\u00a0so is the breadth of leadership.<\/p>\n<p>Nevertheless, current leadership is nowhere near as strong as it was in prior years.<\/p>\n<p>This is to be expected considering the broad market is no longer in a strong uptrend and the major indices are all trading below their declining 200-day moving averages.<\/p>\n<p>So, what are recent signs of strength?<\/p>\n<p>Breakouts in $MITK, $MLNX, $EBIX, $TXRH, $PYPL, $FSLR, $CRAY, $HIMX, $OCLR, and $RUTH are a few examples of strong stocks with leadership, and here are a few stock charts to show you the type of action we are looking for:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/160302MLNX.png\" alt=\"MLNX breakout\" title=\"\"><\/p>\n<p>Next up is insurance software outsourcing company Ebix:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/160302EBIX.png\" alt=\"EBIX breakout\" title=\"\"><\/p>\n<p>If you&#8217;re not already holding Ebix, it is\u00a0<em>not<\/em> a positive reward-risk ratio to chase a buy entry at current levels, but you can stalk this stock for a low-risk buy entry on the pullback (an entry of $38-$39 could be nice).<\/p>\n<p>Online payment giant PayPal is another strong stock we like for pullback buy entry in the coming days:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/160302PYPL.png\" alt=\"PYPL breakout\" title=\"\"><\/p>\n<p>Finally, on\u00a0February 16, we posted on <a href=\"https:\/\/stocktwits.com\/MorpheusTrading\" target=\"_blank\" rel=\"noopener\">StockTwits<\/a>\u00a0that Mitek Systems ($MITK) was setting up for buy entry as it broke a key downtrend line.<\/p>\n<p>In our <a href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">nightly stock pick newsletter<\/a>, we have been long Mellanox Technologies ($MXL) since our February 24 entry of $14.97 and are currently showing an <strong>unrealized gain of 11.6%<\/strong> as of yesterday&#8217;s close.<\/p>\n<p>Since then, the stock has jumped a whopping 22% and is still going strong (we also highlighted this stock in <a href=\"https:\/\/www.morpheustrading.com\/blog\/best-stocks-march-2016\/\" target=\"_blank\" rel=\"noopener\">this<\/a>\u00a0February 25\u00a0blog post).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Good_Habits_Consistent_Trading_Profits\"><\/span><strong>Good Habits = Consistent Trading Profits<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Some traders obsess over stock charts and stare at them all night long in an attempt to predict future price action, but<strong> don&#8217;t stress yourself out<\/strong> by falling into this trap.<\/p>\n<p>Instead, simply\u00a0get in the habit of screening for leading stocks every week and ask yourself, &#8220;Are there any bullish chart patterns?&#8221; If so, what industry sector do they belong to? Is their confirmation in the form of group strength as well?<\/p>\n<p>Doing the above will <em>not<\/em> guarantee you will become a better trader in the short-term, but\u00a0developing a <em>solid and consistent work ethic<\/em> should eventually produce positive results (assuming your <a href=\"https:\/\/seekingalpha.com\/instablog\/586126-morpheus-trading-group\/840481-importance-of-controlling-risk-in-a-choppy-stock-market\" target=\"_blank\" rel=\"noopener\">risk management<\/a> is also in line).<\/p>\n<p>While the herd focuses\u00a0on whether or not the NASDAQ will bust through this level or that level, you now have the inside edge to knowing what really matters &#8212;<em> the performance of leading individual stocks.<\/em><\/p>\n<p>Although there is<em> no substitute for hard work and consistency<\/em> in the stock trading business, building and continually monitoring your list of leading stocks is an excellent &#8220;shortcut&#8221; to knowing the true sentiment of the market and becoming a consistently profitable trader.<\/p>\n<p><em><a href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\"><strong>Sign up now<\/strong><\/a> for your risk-free subscription to The Wagner Daily and be instantly alerted to our exact entries, stops, and target prices of the best stock trade setups in the market every day.<\/em><\/p>\n<div class=\"cfmonitor\" style=\"padding-top: 30px;\"><center><script src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\" async=\"\"><\/script><!-- Footer of content - Large --> <ins class=\"adsbygoogle\" style=\"display: inline-block; width: 336px; height: 280px;\" data-ad-client=\"ca-pub-7565144363001883\" data-ad-slot=\"6017996961\"><\/ins><script>\/\/ <![CDATA[\n(adsbygoogle = window.adsbygoogle || []).push({});\n\/\/ ]]><\/script><\/center><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In last week&#8217;s blog post, we showed you six stocks with relative strength and the potential to show leadership IF\u00a0overall broad market conditions started to improve. Since then, the main stock market indexes\u00a0have indeed been under control of the bulls, and all the major indices are\u00a0now trading above their respective 20 and 50-day moving averages [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-4440","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4440","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=4440"}],"version-history":[{"count":1,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4440\/revisions"}],"predecessor-version":[{"id":11270,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4440\/revisions\/11270"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=4440"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=4440"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=4440"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}