Market Scans – Quick & Easy

Scanning Market ETFs to Create Actionable Watch-lists

One question many new traders ask is “how do I find tradeable stocks in the market?”, “What do I look for?”, “Where do I find the stocks that lead the market?” The answers to these questions might be much simpler than you think!

A quick and easy method I use to scan the market for leading stocks is through market Exchange Traded Funds (ETFs) Many ETFs have done the hard work for you! These funds usually contain the best of the best within the holding. In fact, a watch-list that I ALWAYS have on my main screen is a “Market ETF” watch-list. Throughout each trading day I watch these ETFs to see how the market is performing. With this watch-list I can quickly see the strengths and weaknesses in the market! This allows me to see the sectors that are leading the market and the sectors that are weak for the day. This is very valuable information to a short-term day/ swing trader!

Here is a screenshot of my ETF watchlist:

With this information how can you use it to your advantage you might ask? Well the answer to that is very simple! Every night after the market closes, I scan through the TOP 10 Holdings of each ETF! ($SPY / $QQQ / $XLF / $DIA / $SOXL are my go-to!) With that I make watch-lists for the very next trading day. The trick to this though is to wait until the market ETFs are setting up a trad-able pattern. My go to pattern in these ETFs is usually at Bullish / Bearish Flag setup. If the ETFs are setting up a trade-able pattern this is your time to take advantage of a potential edge and execute upon it!

But where do I find the TOP 10 Holdings of these ETFs? These lists can be easily found on finance.yahoo.com.

Step 1: Search the ETF ticker at the top of the webpage.

Step 2: Confirm the search has retrieved the proper ticker you were searching for.

Step 3: Scroll down the page about half way and the TOP 10 Holdings List will be on the right side.

Here is a list of the Top 10 holdings of my go to ETFs:

$SPY TOP 10 Holdings

$QQQ TOP 10 Holdings

$XLF TOP 10 Holdings

$DIA TOP 10 Holdings

$SOXL TOP 10 Holdings

Creating the Watch List

With these top 10 lists at hand I’ll usually scan the top 3 – 5 symbols on each. The beauty of creating a watch-list out of these market ETFs is in most cases you get a well diversified, actionable list with potential trade setups. If you have relative weakness in one sector other sectors may have relative strength the very same day, giving you a potential edge, long or short.

Here is an example of what I look for when creating a list. Let’s focus on $XLF!

Notice how on the $XLF daily chart Is setting up a very nice Bullish flag pattern? Now let’s look through the Top 10 List and see if we can spot a name where we can create a potential edge in the market! Remember as a trader you want to try to outperform the market not match it. If you wanted to just match the performance buying the ETF would be more appropriate!

A quick scan gives us this:

BRK.B Daily Chart:

Take a look at that very nice bullish falling wedge setup on the $BRK.B Daily chart! What makes this setup very nice is although the $XLF has held a tight range $BRK.B ran up quite quickly and then pulled back in a “smart” manner. This setup is ideal because you have a 1:3 Risk to Reward. You’re basically risking 1% to make 3% – 4%! The best thing about this scan was $BRK.B was literally the first scan in the list and you found an actionable setup!

Now I would continue to scan each sector and each list until I had a solid diversified watchlist for the very next trading day. The trick to this, is to wait for the sector to setup as a whole then look for the strongest, most ideal risk to reward setups within the sector lists. NO SETUP = NO TRADE!!!

I do these types of scans nearly daily and quite oftentimes find great setups long and short, through these very simple scans! You can do it too!

*IN NO WAY WHAT SO EVER SHOULD THIS BE TAKEN AS FINANCIAL / INVESTMENT / TRADING ADVICE! This is a place where I keep MY RECORDS!