One of the simplest methods to find stocks that move is to find stocks that have already moved.
Volatility leads to more volatility. You don’t have to get in on the first go, as the reversals and secondary impulses can be just as powerful.
The scan you need to setup is very straightforward:
- The high is greater than the upside 3rd standard deviation bollinger band
- The high is greater than 10 [this is to filter out penny stocks]
- Volume is greater than 100,000 [filter out low-liqudiity plays]
These 3 parameters will give you a list of stocks that have seen statistically significant movement to the upside.
Here’s how I like to use it:
Parabolic shorts. If the stock continues to stay above the Bollinger band, it becomes pretty overbought. I start looking for signs of reversals and do a countertrend fade.
Continuation patterns. If the stock sees a pullback and consolidation, it offers low risk entries in the form of bull flag and pop-drop-chop patterns.