Video: Technical Analysis with SwingTradeBot

August 21, 2023

Over the weekend my good friend Duru posted a video (on his "Dr. Duru Diagnoses Markets" YouTube channel) of his stock screening process using SwingTradeBot.  I think it will be helpful to those new to the site and/or new to technical analysis.

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Duru's technical reads and reasons for excluding certain charts are very similar to my own.  So I agreed with about 90% of his reads but I'll point out some differences at the bottom of this post.  

What was really interesting to me about this video was watching the way he used the site.  They say that software developers should watch people using their creations to check for usability issues.  It's been a long time since I've watched someone use SwingTradeBot so it was enlightening to me as the site's creator to watch Duru's video.  In fact, I made a few changes to the "As Charts" page after watching the video.  Key things I noticed:

  1. He was writing down tickers on paper (gasp!) instead of adding them to a SwingTradeBot watchlist directly.  As I wrote 9 years ago, the watchlists are a key part of SwingTradeBot (and reiterated here).  So I really think people should make use of them to have "the bot" give you both end of day and intraday alerts on the stocks you care about.
  2. A big part of Duru's process depends upon knowing the company's sector and/or industry.
  3. After asking Duru, I confirmed that he didn't realize that the company names were, in fact, links.

When I'm using SwingTradeBot (and most sites) I make extensive use of opening links in new browser tabs for later examination.  So when I'm on the "As Charts" scan results page, I open the stocks I want to investigate further in new tabs.  Once I get through all the charts, I go to the recently opened tabs to check things like sector, whether earnings are coming soon, see what other signals that stock triggered, check the average volume & possibly some other indicators, glance at recent news and to add stocks to watchlists.

Here are the changes I've made to the "As Charts" page to hopefully help speed people through their analysis:
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  • Underlined the ticker symbol & company name in hopes that makes it more obvious that they're links / clickable 
  • Made those company name links default to opening in a new browser tab (note that a normal click will switch you to the new tab immediately.  Doing a CTRL-Click / Command-Click will open the new tab but keep you on the "As Charts" page)
  • Added the sector & industry to each stock
  • Added an "Add to Watchlist" button for each stock so you can now skip going to the stock's page if you wish.

As I mentioned above, here are a few ways I see things a bit differently than Duru.  And this is completely fine -- different strokes...

DBRG
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Duru disqualified DBRG because it had a red candle (closing price was lower than the opening price) and it closed near the 50 DMA.  I actually like the red candles because they can be easier for me to buy.    I almost always set my orders to trigger if and only if the stock rises above the previous day's high.  So if the stock keeps selling off or doesn't bounce far enough to trigger my order it's no big deal, I just wasted some time entering the order.

I find that it's much more likely that stocks with a green candle at the bottom of a pullback will gap up the next day.  Those gaps often take the stock too far from my stop loss and thereby mess up my risk/reward ratio.  Then I have to decide to chase or let it go.  Stocks with red candles at the bottom of a pullback are more likely to actually trade to my desired buy point rather than gapping over it.

Also, a red candle means that sellers/bears were in control intraday.  There may be short sellers who will be quick to cover if the stock starts to rise the next day. So I think that red candles are somewhat more likely to catch bears "offsides".

MCK

Duru liked MCK despite the gap down & said he usually passes on high dollar priced stocks "because of the options are more expensive and/or I just don't like having to buy just a few shares"

The gap down would have disqualified MCK for me but I really want to focus on the high priced stock issue.  This is a long time pet peeve of mine!  I know that a lot of people shy away from high priced stocks but I think it's better to think in dollar (insert your currency here) amounts and percentages rather than number of shares, price per share & point moves.  That's the way to equalize things among various stocks of different prices.  If I have $10,000 to invest it should make zero difference whether that can buy me 10 shares, 500 shares or 10,000 shares!  We're no longer in the days when you had to buy in increments of 100 shares.  In fact, these days you can even buy fractional shares.  So I think there's no (good) reason to shy away from high priced stocks simply due to the share price.

P.S. Perhaps contradictorily, I tend to NOT look at low-priced stocks (under $10 for me) because that's often a sign that the company is troubled.  I'm probably also biased based on what I learned years ago about mutual funds & other institutional investors being restricted from buying low priced stocks -- I'm not sure how true that is nowadays.