TradeStops members have been responding to TradeSmith’s editorial last week that focused on investing only in stocks that are in the green SSI Entry zone. The most-asked question is how to find stocks that have moved from a red SSI Stop condition and triggered a new green SSI Entry signal.
For those who might have missed the article, TradeSmith showed the results of backtesting over 1300 financial instruments including US stocks and indices, foreign stocks and indices, commodities, and funds.
He found that the best results were buying stocks right after they had moved from the red SSI Stop zone into the green SSI Entry zone. The results for stocks moving from green to yellow and yellow to green were also good. In each case, the average winner performed at least 5x better than the average loser.
The best way to find stocks that meet these criteria is to set up some simple Watch portfolios and have a specific focus of each portfolio. I routinely monitor a couple hundred stocks at a time by doing this. They’re easy to set up and once they’re set up, it doesn’t take much work to keep them updated.
Setting up a Watch portfolio is done the same way as setting up an Investment portfolio. Go to the top of the TradeStops page and click on the “Portfolios” tab. This will open a new window. Click on the “Manual” tab and enter the information you’d like for this portfolio.
As many TradeStops members have seen in the past, I like having a portfolio of the Select Sector SPDR ETFs. This allows me to get an overview of what’s happening in the different sectors.
This is what the portfolio looks like after being set up. There are currently 10 ETFs. XLRE has been trading for a very short period of time and does not have enough trading history to have developed a Stock State Indicator. (XLFS will discontinue trading in the middle of November and that is why it is not included in this portfolio.)
Now, in a quick glance, I can see an overview of the different sectors that make up the stock market.
After setting up this portfolio, I am now going to set up Watch portfolios for each of these ETFs. In the TradeStops program, you can have up to 20 portfolios and each portfolio can have an unlimited number of stocks. For each of the ETF portfolios, I’m going enter the top 10 holdings in each ETF. You can easily get that information from the websites of the ETF sponsors.
Here’s what the first few ETFs look like on the Portfolio page.
Let’s click on the XLB ETF and see the Positions page.
Six of these stocks have had green SSI signals for a while, but two of them are in the red and could be worth watching in the future if you want to buy when they turn green. We have SSI alerts set up for all of these positions to help us know when stocks change zones from red to green to yellow and so forth.
I have Watch portfolios set up for the top stocks that make up GDX, the gold miners ETF. This portfolio has seen a lot of action lately.
The column that shows the number of days in the SSI State is very helpful. Looking more closely at NEM, you can see that it just moved from the yellow zone to the green zone.
It will take about 10-15 minutes to set up your first Watch portfolio, but as you get the hang of it, it shouldn’t take much longer than 5 minutes to set these up. In the next few months, we will be introducing the ability to upload stocks from an Excel file into TradeStops. This will make it even easier to set these up. Updating the Portfolios is also simple and won’t take much time either.
And you don’t have to look at them every day. Using the SSI alerts, you will be notified when changes in status occurs.
This is an easy way to watch scores and even hundreds of stocks according to your interests and what’s best for your investment needs. We will continue to help our members utilize the TradeStops tools to become more successful investors.
Member Services, TradeStops