In Search of Winning Stocks

This Week: Screening for Potential Downward Reversals

1.  Screening for Potential Downward Reversals
2.  Search Criteria
3.  One Stock Staging A Potential Downward Reversal
4.  Disclaimer

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Wall Street City's Stock Search of the Week

1.  Screening for Potential Downward Reversals

Based on the name alone, Potential Downward Reversals sounds
like a search strategy that is designed for traders who
looking for stocks to short.  While certainly the search
strategy works well for purposes of identifying stocks that
may be attractive shorts, the strategy also benefits
investors with long positions by helping them to determine
when to start considering taking a profit.  The reason is
that once an upward trend is broken, a stock can potentially
fall to prior areas of resistance or lower, thereby cutting
into or completely negating profits.  Therefore, knowing when
to sell a stock is as or perhaps even more important than
knowing when to buy it.

The strategy is based around three technical criteria -
six-week relative performance, one-day relative performance,
and the one-week change in the accumulation distribution
ratio.  A minimum gain of 10 percent over the past six weeks
is required to screen for stocks that have recently
appreciated in price - an upward price trend.  This group is
then screened for a one-day decline in price combined with a
recent, negative change in accumulation distribution ratio.
The accumulation distribution ratio is a proxy for measuring
buying and selling pressure and combining it with a decline
price suggests that sentiment may be shifting against a
stock.

It is important to note that this strategy screens for
potential reversals and the mere appearance of a stock in
the results does not necessarily mean that it is experiencing
an actual price reversal.  Instead, the strategy should be
used more a starting point for determining when an exit or
short strategy should be implemented.  Investors are
encouraged to look additional signs of a trend reversal,
such as negative breakout in the MACD, Wilder RSI or moving
average indicators.

The search strategy is designed to be run on at least a daily
basis.  Investors can click below to see the current results.

http://clyde.investools.com/T/A28.146.836.1.113719

2.  Search Criteria

By subscribing to Wall Street City, investors can utilize
Power ProSearch to build a search like the one below,
created by Wall Street City analysts, to identify stocks
that may be at risk of trending downward after having made a
strong upward move in price.

Indicator                     Mode
------------------------------------------------------------
Rel Performance 6-Wk          Between 110.0 - 99998.0, High
Rel Performance 1-Day         Between 10.0 - 98.0, Low
Acc. Dist 1-Wk Chg            Between -999.0 - -1.0
Volume 30-Day Average         Between 250.0 - 99998.0

Investors can click below to view the search stategy's
results.

http://clyde.investools.com/T/A28.146.836.2.113719

3.  One Stock Staging A Potential Downward Reversal

Mohawk Industries {MHK} was trading down by 8.6 percent at
11:30 a.m. EST this morning on news that it would be
acquiring Dal-Tile International {DTL}.  Investors are
balking at the price tag, which places a 31 percent premium
on the value of DTL - based on yesterday's closing prices.
Prior today, MHK had been making a strong rebound,
appreciating 71.6 percent since September 21.  Today's
volume, already the highest in five months, suggests that
this rebound may finally becoming to an end as many investors
are taking profits.

Investors can click below to view the search stategy's
results.

http://clyde.investools.com/T/A28.146.836.3.113719

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4.	Disclaimer

WallStreetCity's Stock Search of the Week is published
solely for informational purposes and is not a solicitation
or an offer to buy or sell any stock, mutual fund or other
security.  The information obtained from internal and
external sources is considered reliable, but has not been
independently verified for accuracy and completeness.
WallStreetCity, its employees, and/or officers and directors,
may from time to time have a position in the securities
mentioned and may sell or buy such securities.
Trading involves risk, including possible loss of principle
and other losses.  Trading results may vary. No
representations are being made that these techniques will
result in or guarantee profits in trading.  Past performance
is no indication of future results.

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