|By: Richard Mowat||POSTED: 06/24/11 11:49 AM
FILED AS: Energy Investing Articles
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Stock screener software is applied to analyze a huge quantity of market intelligence to identify what you need in a very short time frame. Software companies provide multiple applications of this technology from investing to trading, and event driven searches. There are multiple ways to use a screening tool.
You can use the stock screener software to look for stocks that split inversely. For example the intent is to sell short shares where the stock has a reverse split for example one for three shares). Normally this can happen if the financial prospects appear poor and they’re at or below the minimum price allowed on the stock exchange to be on the exchange as a public business. If you believe the chief financial officer has a poor strategy for the company, then it mighcould be a good time to short-sell the stock. In this strategy, you should screen for inverse splits. Just enter a screen such as “shares outstanding now is lower than 0.5 times shares outstanding 1 week in the past.” This will search for shares that did a split of a minimum of 1 to 2 recently
Search for volume pattern. Suppose your strategy is to acquire low priced shares that have created a discernable basing formation in prices and exhibit large institutional buyers entering. The idea is to buy in early alongside the big institutions before the stock price begins becoming richer. You can write a filter with this approach: price is less than 7 weeks in the past and price is higher than or equal to the mid-price of the last 30 weeks and weekly volume is greater than 5 times median weekly volume for the last 7 weeks. The stock screener software should find shares that have finished their down trend and have jumped in volume in the last week, which could suggest large investors.
Filtering for balance sheet and income growth. If you are a cash flow driven value investor like Berkshire Hathaway, you may create a highly useful screen. Write a rule that says “discover stocks with debt-to-equity relationship lower than 1 and average cash flow growth over the past 3 periods of at least 10%.” The screener will isolate conservative companies in a steady debt situation with rising free cash flow. Through this screen you can additionally drill down to find companies with improving cash from operations and possibly discover a handful of superb value investments.
The above are only a few of the examples of the uses and features of stock screener software.