I have been a user of the Metastock software and its data subscription service since 2009.
Besides using it to analyze Singapore stock charts, another function I use daily for my analysis in this powerful software is the Market Explorer.
Screen for stocks with major price changes on above average volume
On a typical market day, a third of stocks listed on the Singapore stock exchange closes higher compared to the day before. Another one-third remains around the same price and the remaining 33% closes lower for the day.
Wouldn't it be great if we could know the top 33% of stocks that closed higher for the day. Wouldn't it be even better if we could find out the top 1% of that top 33% or avoid the bottom 1% of the one-third that closed lower for the day or for the week?
When I had this idea a few years ago, I went though the manual process of looking through every stock chart of the 700+ listed Singapore stocks, screening for stocks with substantial increase in volume coupled with an increase in price.
I really wanted to analyze the Singapore stock market everyday but to do it manually is an unsustainable endeavour. Even when I decided to relegate the stock screening to the weekends, sometimes it took me the whole weekend to go through the 700+ charts of stocks listed on the Singapore stock exchange.
Logic behind a significant price and volume increase
Volume represents the amount of shares exchanging hands between buyers and sellers. A surge in volume may mean that a stock is gaining increased interest from market participants. The motivation behind the increase in activity can be aplenty. But is a significant increase in volume a good or bad thing?
A good way to differentiate the good from the bad is to couple it with price.Generally, a significant volume increase coupled with an increase in price is a positive sign. Likewise, a higher than average volume traded combined with a drop in price is a negative sign.
For illustration, imagine a stock priced at $1.00 with an average daily volume of 10 million shares changing hands. One day, volume spiked up to 20 million shares with a price increase to $1.05. The total traded value of the stock increased from $10 million to $21 million. Out of the $11 million increase in traded value, half of them are buyers. Why would these buyers suddenly put in $5.5 million into the stock?
Whatever the reason may be, the increased activity is recorded by the trading volume of the stock. This may be a good way to spot the stocks that are gaining interest from market participants because it takes a lot of money to move a stock.
How to use MetaStock to screen for stocks with genuine market interest
First things first. You got to have access to MetaStock either through a one time purchase or on a subscription basis. Depending on your investment needs, choose between Metastock D/C which works with end-of-day data or MetaStock R/T that is compatible with real time data.
My Metastock Software
I bought the MetaStock software through a one time purchase in 2009. My version of the software is version 11 but MetaStock is now into its 14th version. Even though I'm using the older version, not upgrading to the latest version didn't have much of an impact for my day-today analysis.
My Data Provider
I'm subscribed to DataLink, an End-of-Day data plan provided by Thomson Reuters, one of the world's most reliable financial information providers. With my Datalink plan for the Asia/Pacific region, I have access to 25 stock exchanges including major markets such as Japan. China, India, Korea, Australia, Taiwan and of course Singapore.
There are 2 other regions you can subscribe to if you want. These are the 'European/Middle Eastern/African' regional data and the North/South American regional data.
The Metastock screening process that I use daily
Step 1) The Exploration Tool
The Price and Volume exploration tool that enables you to screen for stocks that meet the price and volume criteria that you have set, is provided together with a list of 100+ other exploration tools.
Step 2) Setting the Filters
Default filters are already in place when you buy the software but If you want to change the exploration criteria, you can do so in the exploration editor.
In the filter box above, it just means
col A > 0.20 : Filter for stocks with prices above $0.20 AND
col C >= 5 : Filter stocks that increased more than/equal to 5% in price AND
col D >= (col E*1.5) : Volume transaction is 50% higher than the average volume for the past 50 days AND
col D > 10000 : Volume traded is more than 1 million shares.
Step 3: The scanning process
Now that I use MetaStock to help me in filtering stocks that attracts genuine market interest. It take me less than a minute a day to screen for stocks that fit my criteria. Definitely a time and effort saver compared to going through 700+ charts one by one, every day!
Step 4: The Results (and what to do with it)
Don't be too excited and buy into the filtered stocks straight away. The price and volume exploration is only the first step in my stock selection process. But it is also the most important step, to find stocks that market participants are genuinely interested in and have the demand to push the share price higher.