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Author: tm2001 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 80  
Subject: Looking for bases in all the wrong places Date: 2/23/2001 8:07 PM
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One of the things we all seem to try to do in TC2000 is to write formulas to look for bases. I don't know how many hours I've spent (and wasted, other than learning some of the details of how to use the product) trying to do this. I've come to the conclusion that it really isn't feasible to write a formula to find a CWH or rectangle base. However, finding a flat base is another matter. This post contains a couple of tips if you're interested in flat consolidation bases. First, the formula below will find a base no deeper than 10% and which is at least 20 days long:

(MAXH20-MINL20)/MAXH20 <= .1

You can change the formula to suit your own needs, either making the length requirements longer/shorter or making the depth bigger or smaller.

Second, you could add a volume scan to this formula which would look for an average volume over the duration of the base which is less than the average volume over the preceding, say 50 days, by using:

AVGV20 < AVGV50.21

Put these together and you might have something to start with, namely, a chart with a flat base which meets your length and depth requirements and with declining volume.

Finally, when scanning for flat bases, I've found it helpful to change the scaling from arithmetic to a custom logarithmic scale. You can do this by using the Indicator Tab / Scaling / Custom Scaling sequence and then selecting your scaling interval. If you use this scaling set-up with a 10% value, then your chart will have a 10% price difference between the horizontal grid lines. That way, if you're looking for bases which are approximately 10% deep (as in this example), it's easier to see them.

I like to use the formulas along with the custom scaling when I'm prospecting for flat bases. It just makes it easier to spot them. Then, prior to setting a buy point, I'll change the scaling back to arithmetic.

Anyone else tried this or something similar?

-tradermike
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Author: zathrus1 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6 of 80
Subject: Re: Looking for bases in all the wrong places Date: 2/23/2001 8:39 PM
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Hi Mike,

I've been working along similar lines for a little while. Your tips are greatly appreciated.

One thing I've also been working on (with an eye on Weinstein) is a pretty simple screen which detects when the 10 DMA crosses up through the 150 DMA.

In theory, that should find a lot of potential Stage 2 stocks early on. I wonder if you have any comments on using a technique like that???

Gary


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Author: fulltimedreamer Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7 of 80
Subject: Re: Looking for bases in all the wrong places Date: 2/23/2001 8:50 PM
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If you use this scaling set-up with a 10% value, then your chart will have a 10% price difference between the horizontal grid lines. That way, if you're looking for bases which are approximately 10% deep (as in this example), it's easier to see them.

TraderMike,

I can't believe I never thought of that. Thanks for the scaling tip.


Peace,
dreamer

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Author: tm2001 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14 of 80
Subject: Re: Looking for bases in all the wrong places Date: 2/24/2001 3:55 PM
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Gary: I have spend a bunch of time in the past looking for a way to create formulas to help with Weinstein-type scans. One thing that appeared to hold promise at one time, and which I haven't had the time to fully research, was to look for the 10d or 20d crossing above a 150d which has been declining steadily for at least x months (pick your timeframe) and is starting to flatten out. Then a 50d starting to turn up also looked like it would be a good addition to the pcf. However, like I said, I haven't researched it fully. I just never could seem to get it to work consistently. As an aside, an associate of mine uses the Weinstein model to trade sector funds and appears to do quite well with it. I try to set aside at least one day per week for this type of research, and maybe it's time to dust off my old formulas and try them again. However, for real trades, I'll stay with the model outlined in my posts on the CANSLIM board. At least for now. Please keep us up to date with your Weinstein research. I hope you hit a home run with it.
-tradermike

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