Step
2: Volume
Volume
is an important marker because monitoring
the volume can help you corroborate
a price movement or caution that
a price move is unreliable. Volume
confirms the price trend when it
increases with an uptrend and decreases
with downtrends. When you have a
price breakout on declining volumes,
this divergence is a warning of
decreasing buying pressure.
Stocks
with low volumes are typical of
the uncertain outlook that usually
occurs in sideways channels. Low
volume also occurs during the indecisive
period during market bottoms.
Stocks
with higher volumes are more liquid,
and are therefore easier to sell.
High volumes are common at the beginning
of new trends such as a breakout
and are typical of market peaks
when there is strong agreement that
prices will move higher. Volume
often increases due to panic, just
before market bottoms. If you choose
a stock with a higher volume it
will be more liquid - making it
easier to sell. So for this initial
stock screen example, choose a volume
of 50,000.
Step
3: Dividend Yield
The
final fundamental indicator you
will add to this initial stock screen
is going to be dividend yield. The
dividend yield gives an indication
of the income generated by a share
of stock. A company must generate
an after-tax profit to be able to
pay dividends. Dividend Yield is
a percentage of income generated
by the stock. For example, a stock
that pays 1$ over the year, and
has a stock price of 10$, would
generate a dividend yield of 10%.
More established companies tend
to have better Dividend Yields.
So, in this case we will choose
a yield of 5%.
To
summarize, the criteria you will
be screening stocks on with the
criteria chosen above, is:
Closed greater than or equal to
$5.00
Volume greater than or equal to
50,000
Dividend yield greater than or equal
to 5%
These
are the results of the search.
The
results of this initial stock screen
show too many results. So, what
you can see from creating this initial
stock screen is that you need to
add more technical and fundamental
criteria to narrow your search.
In
our next newsletter you will learn
how to refine your screen by experimenting
with other fundamental indicators.
We will also include the use of
technicals, which will aid you in
screening for stocks that are in
a potential move.
For
more example stock screens, see
the ChartFilter stock
screener Instructions.
Log
in to the ChartFilter stock
screener to start.
When
screening for stocks, it is important
to experiment until you have found
the winning combination. Here are
some tips and questions to help
introduce you to the ChartFilter
stock screener.
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