Chapter 6 - Gyration stock finder

Transcription

1 Chapter 6 - Gyration stock finder Gyration Stock Finder Help Help Guide Click PDF to get a PDF printable version of this help file. Gyration Stock Finder allows the user to create stock lists based on the gyration of stocks in a channel. Gyration Stock Finder only searches for stock close price variations so it is fast. Gyration Stock Finder can search all optionable stocks for all 40 day Gyrations within 60 secs if the server is lightly loaded. As the user increases the days in the channel, Gyration stock finder takes longer. An example of the what we mean by a stock gyrations in a channel is shown next: CIT Group Inc. (CIT) A channel consists of a center line and an upper and lower line. The channel extends from the start of the past trading date to the latest date of the web site. The center line can be drawn in two different ways: Start Close price to End Close price. Best line fit to all close prices within the time frame analyzed. The end points of the upper and lower channel are drawn as percent differences from the center line endpoints. The end point percent values can be different so it is possible to construct constricting and opening channels. A constricting channel is similar to a flag pennant formation in stock price analysis. Stocks that gyrate inside a channel are useful for sideways strategies like Calendar Spreads with close to ATM strikes. Stocks that gyrate outside a channel but otherwise go sideways are useful for OTM and ITM sideways strategies. For example, buy a cheap OTM Call butterfly or calendar spread and wait for the Gyrating stock to enter the butterfly or calendar profit region. Stocks that are inside a constricting sideways channel may break out soon and sideways neutral strategies like straddles may profit from later stock movement. Here are the benefits of Gyration Stock Finder: You do not have to create a list of stocks to search. Gyration Stock Finder will search all stocks and has its own stock list creator. The output is not restricted to the top 100 trades. You can display the top 1000 trades.

2 Gyration Stock Finder is very easy to use. Select one of the six Wizards, click the Ranking button. The max Gyration Stock Finder time is 30 secs. If the General Settings maximum searcher time is less than 30 secs, then Gyration Stock Finder will use that lower General Settings time limit. If Gyration Stock Finder does not finish in the time allocated, click the Continue button. Gyration Stock Finder will automatically merge and rerank the new results with the prior rankings. Each Gyration Stock Finder output row has a stock chart link, a news link and a trade link. The trade link opens with the stock loaded in Create Trades. They all open in new windows. You can save your Gyration Finder settings for use another day. Enter a name next to "Create Gyration Finder" and click SAVE. Select the saved Gyration Finder next to "Other Gyration Finders" and click REPLACE. If you later want to change the saved Gyration Finder parameters, load it, change it and click UPDATE which appears after it loads. You can delete saved Gyration Finders using List Tools > Saved ListTools in the top navigation bar. The input parameters for Gyration Stock Finder are shown next:

3 The user selection options are as follows: Days in the past to start the Stock Price Channel - Choose the trading days in the past to form a channel. 40 days is default. Channel center line construction - You can choose start close to end close or best line fit. Either works fine. Change between start and end channel center line endpoints: (absolute value) - The absolute value of the rate of change of the line endpoints must be between these two ranges. They default to 0 and 3 percent for sideways strategies. Upper Channel Line end points from center line (%) - The percent of the endpoints used to form the upper channel line. Lower Channel Line end points from center line (%) - The percent of the endpoints used to form the lower channel line. Rank stocks by number of Gyrations: - You pick the gyration ranker: Outside the channel lines or inside the channel lines. The ranking process is described below. Or use Stocks matching these criteria - The criteria apply to the volume and end of day close prices of the optionable stock values. Gyration Finder Wizard Settings - Select a Wizard to get those search settings. They are applied when you change the wizard setting. If you want to create and search your own settings, always choose "None" for the wizard selection. Gyration ranking is performed as follows: For Gyrations inside the channel: If the close crosses the upper or lower channels the stock is not ranked. If the stock stays inside the channel then, the times the stock was above the center line then crossed below the center line the next day is counted. Likewise the times the stock was below the center line then is above the center line the next day is counted. The minimum of the two counts is used in the ranking to compare with other stocks. If two stocks tie in minimum center line crossings, the other center line crossing count is used to break the tie. Stocks that go back and forth in the channel are ranked highly. An example of a highly ranked inside the channel stock with a "start close to end close" center line is shown as the first chart in this help web page. The highest ranked inside the channel stock has the most balance of upper and lower channel values above and below the channel lines for all stocks. The next figure shows a stock that ranked highly using "best line fit" to form the center channel shown. The "Low Gyration Closing Channel" wizard was used but the mininum percent change was increased to 10% with no upper limit. The stocks form a closing pennant flag formation. Note the balance between stock closes above and below the upper and lower channel lines. NEXTEL Communications,Inc. (

4 For Gyrations outside the channel: The times the stock close is above the upper channel is counted. Also the times the stock close is below the lower channel is counted. The two numbers are compared and the smaller of the two counts is saved for rankings with other stocks. If two stocks tie in minimum crossings then the stock with a higher amount in the other crossing is used to break the tie. The next figure shows a stock that ranked highly using "start close to end close" to form the center channel line. The center line passes through the end close and the start close 40 trading days earlier. Note the balance again between stock closes above and below the upper and lower channel lines. Royal Caribbean Cruises Ltd. Two different web page results can occur depending on how much time your search takes, how many stocks are being searched and the number of users online. If not all stocks are searched, a page similar to the one below appears and contains a Continue button. Click the Continue button to continue the search and merge the rankings. If all the stocks are ranked successfully, a web page similar to the one that appears below the Gyration input above occurs. The columns are (they are different depending on your selections): RK - Rank. This is the ranking of the gyrating stocks. Stock - The stock symbol. Clicking the stock symbol opens a Platinum Charts window for that stock. Platinum charts does not have channel charting capability. Clicking "trade" opens a new window with Create Trade and that stock symbol loaded. Clicking the news link opens a new window with the Optionetics News for that stock shown. Click the chart link and the stock price chart is drawn with the lines used by Gyration Finder overlaid on top of the stock price charts. You can only create the Gyration line overlay plots in Charts by first running Gyration Finder and clicking the chart link. But once the lines are in the stock chart overlay, they are saved there for that stock until you leave the Stock Charts web page. The Gyro chart lines and Gyration Finder work in the past. Once you have a chart with Gyro lines, you can move the date forward or backward and the lines stay on the chart. This greatly aids Gyration Finder backtesting.

5 Here is an example. Start Close - The start date stock closing price. End Close - The end date stock closing price. Close Price Percent Change - The percent change between the close prices. Start Center Line - The start date center line value. End Center Line - The end date center line value. Center Line Percent Change - The percent change between the center line end values. Closes Above Upper Channel - The number of times the stock close was above the upper channel. Closes Below Lower Channel - The number of times the stock close was below the lower channel. Closes Crossing Center Line Bullish - The number of times the stock crossed the center line moving up. Closes Crossing Center Line Bearish - The number of times the stock crossed the center line moving down. Average Stock Volume - The average stock volume traded.