5 Things Your Watch List Tells You

09/13/2013 6:00 am EST


Frank Zorrilla

Founder and Chief Investment Officer, Zor Capital

Although most traders keep a watch list to help them act quickly when a set-up presents itself, Frank Zorilla of ZorTrades.com says that’s not all watch lists are good for.

There is no doubt that tracking your daily watch list and your recent closed trades for a week or even longer if they are actual closed trades is vital to getting a feel of what is really happening in the market. For example I’m still going over on a daily basis the stocks that I had on my watch list on 8/29/13 because they tell me a few things:

  • The health of the market, the uncertainty in the Syria situation, Fed possible tapering , jobs number, etc. would’ve kept many away from the market if they did not pay attention to the actual action underneath the surface (stocks).

  • Assuming that you know what a good long technical set-up is, then your watch list should give you an idea of how aggressive you should be. This depends on the amount of set-ups that you find and the performance of the previous day’s watch list. Today, I had 50 stocks that I felt were technically ready to break out; that in itself told me to disregard the fact that the indices were up five days in a row and that they might pull back. A good long set-up is not one of a stock that is up already three-five days in a row, and the outcome of the trade does not make the set-up good or bad. If you want to look at what a good set-up is, just look at some of the charts that I post on StockTwits. Just like in basketball, there is a difference between a good shot and a good make. A good shot is one that you normally take (your sweet spot) while a good make is a forced shot that went in. Shaquille O’Neal making a three-pointer in a game is a good make but a bad shot for him, so remember, the outcome does not make the set-up good or bad.

  • Your watch list will tell you what is working now. Recently, many Chinese stocks have been making themselves to my scans and they have been working great, which led me to look at other Chinese names: KONG, SINA, BIDU, NQ, ZHNE, XUE, CYD, etc.

  • Your watch list will tell you if breakouts are being faded or if they are actually following through, which in turn will make you adjust your holding period for the breakouts you play today.

  • Based on the recent performance of my watch lists since 8/29, I can safely say that the market has been healthy and rewarding heavy risk takers who tuned out the noise, here are some snapshot photos of the top five winners for each day I had a watch since 8/29/2013.

Click to Enlarge

So, don’t be so quick to disregard last week’s watch list!

By Frank Zorilla of ZorTrades.com

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