2-10 Anticipation

Scanning is a balance between restricting a trading universe while capturing candidates.  Too loose on the requirements and there will be noise.  Too restrictive and there will be few signals.  When constructing scans I tend to gravitate towards complimentary signals that form a logical set up that weigh price and volume.

LK 2-10 Anticipation

One scan I use focuses on stocks that are within 2% of their 10 period moving average, have the narrowest range day in 10 days, and the smallest volume print over 10 days.  The logic being that a stock within 2% of its 10 period average is unlikely to be extended, a narrow range day shows price contraction, and a low volume print suggest disinterest.  From there additional characteristics can be used to further reduce anticipation candidates to a more manageable watchlist.

In general, when looking at an anticipation candidate I am looking for a stock where the close and high are within 2% of each other as a break of a high is the signal.  LK fits this criteria.  Additionally the chart pattern forming is constructive. Further, previous moves when this has passed the scan requirements have had follow through.