October 29, 2020

In the last video, we talked about how to find profitable stocks using a stock screener. Now, let’s dive into the two criteria I like to use to find discounted stocks. When it comes to the stock screeners on the market, there are some limitations because not all the indicators are available. In this video, I am talking to walk you through how to use some workarounds to achieve our goal - finding discounted stocks. We are going to focus on technical analysis to find discounted opportunities.

90% correct transcript

So welcome back to my channel. And for this video, we're going to talk about the two criteria to use stock screeners and find discounted stocks. So this is really a six parts video training series, where we talk about how do you stock screeners when to use it? Why would you use it and how do you use it without further ado? Let's dive into this video. So before we start, I just want to celebrate another successful story within investing a celebrator where Raman made a hundred percent gain in FedEx within three months. So congratulations Raman for making a hundred percent on FedEx and three months. And that's an awesome achievement. And he's actually one of the 11 students who made a hundred percent from a single investment to date. Right now I'm running a hundred likes campaign. If there are a hundred likes on this video, then I want to give one person a book that I like in terms of technical analysis.

So in the previous video, I've given out infinite gain by Simon harmonic trading one a, which is a book on technical analysis and patterns, harmonic trading too. And right now it's harmonic trading three. So there are three books in total. And this one is really about reaction and reversal. Harmonic trading is really one of my favorite series. And for some odd reasons, their books are kind of expensive. It's like 70 bucks. If we reach a hundred likes for this video, then I will personally ship that book to you if you win it. So make sure you like this video, leave a comment below and I'll select one winner. Once we reach a hundred likes. So let's get started. For stock screener to find this count stocks. There are two main criteria I use. The first one is mainly a technical analysis for chartmill.

I actually use the EMA on a weekly basis, and this is something that is only available on chartmill and not Finviz. So if you are using chartmill, then this will work for you. Now, if you look at or go through my free chart course, then you actually find that the exact criteria I use is actually a hundred EMA on a weekly basis, but then that is not available for this stock screener. So we got a compromise a little bit and we'll use the best alternative, which is, and simple moving average of 30 weeks. So when you think about it, this means you are using an average of the last half a year or so to determine whether the stock is on a discount or not. So in this case, I like to use two years average, but then in this case, we're using a half a year average and you want the price to be below that average.

So that's when you click on this and then you will be able to find stocks that are below that weekly average. Now we can of course apply the regular above medium criteria as well. So this one, so then you eliminate a lot of stocks and that is pretty much the two key criteria that I use to find stock on a discount. And you'll see that the population here is still quite large. So if you refer to my previous video, then you actually find out, I use a couple of more fundamental analysis type filters as well to find profitable companies. So then you can refer to that video in terms of those criteria. Now there's actually one more trickier criteria on I want to cover, which is the price change for the last 12 months. So let me just find out here. So 12 months performance.

So this is really talking about the price performance, and you kind of want to be careful if this, because it can get tricky, but basically you want to determine the 52 week high and low and how far it is away from it. So if you want a deep discount, you want to set this to be more aggressive. If you don't mind as much of a discount, then yeah, you can, you can think about how you want to determine it. But when you think about it for the last 12 months, if you choose a company that is very, very negative, then that means there's a major events that hit that company really hard. If you choose one that is kind of the same as 12 months ago. So then the trend might be flat or it might be even, yeah, kind of like a triangle where it went up and then it came back down or it went down and came back up and it's still below to SMA 30 weeks.

So I would say to start, you want to start with maybe 0%. So if you do so then you can see that we still have 576 docs. If you apply some fundamental criteria, then that will go down further. But you might want to consider, well, I want it to be dropping for the last 12 months. Then you might want to be like, I want a 30% discount. So here I find something that has at least 30% discount. And then now there's 272 results. So that's one way you can filter in terms of using price. And in terms of a bonus tip, I would just throw in a bonus tip here as well is you can use the 52 week high and low as well. So let me see if I can find it here. So here New 52 week low in the last five days, I think this is actually quite a good criteria because right now it means either the stock is dropping and it's making a 52 week low.

So then that means you will be early, but then you are definitely getting a discount. So once you get this list of 27 results or whatnot, then you really need to do more research over it. So for example, general electric. So even though general electric is on a discount or whatnot, you need to do fundamental analysis and more research over it to make sure you obtain enough comfort over the company itself. Okay. So those are the two main criteria, a which is the SMA 30 medium cap. In terms of bonus tips, you can use the price change for the last 12 months or a 52 week low in order to find stock are on a discount. And afterwards, then you can use technical analysis and fundamental analysis to do further filtering. So that's pretty much it for this video. And my name is Eric Seto and I have been investing for over 12 years and has been teaching investing for our two and a half years now.

And my mission is really to help people without a financial background to target 30% a year. So like always, I have a lot of free resources that is into the description and the comments section. So there's a free case study below that will link you to a webinar that is free, that will outline how I invest in the market. So make sure you watch that if this is your first time here, if you didn't grab the free chart course, which has the exact template I used to invest in the markets, then make sure you get it is in the comments and the description as well. And in terms of the giveaway to get harmonic trading volume three, just like the video and leave a comment below. And then I will pick a winner when we reach a hundred likes and the next, and the final video is three reasons why I don't like to use a stock screener.

And this is actually a bit counterintuitive because I did a whole training series just to tell you how to use a stock screener. And then now I'll tell you the reasons why I don't like to use one. So this will really give you both sides of the coin, because I think it's very important when you're investing to know when you should use a tool and when you shouldn't use a tool and that's what the final video is about. So make sure you stay tuned and watch that final video. I'll see you in the next one. So thank you for watching and I hope you enjoyed the video. Please help support me by like subscribe and you can watch the next recommended video here as well.

About the author 

Eric Seto

Eric Seto is an investor with over 10 years of experience. He travelled around the world to help with auditing, accounting, purchase and sale of companies.

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