The last time I talked about this strategy was back in October 2007, right before the bear market hit. Prior to that time, this strategy, going all the way back to the year 2000 (2000 thru Sept. 2007 – nearly 8 years at that time) had shown an average annual return of 72.7% a year.
2008, as you might have guessed, was a tough year. But that's part of trading. There will always be challenges along the way. But knowing that you’re using a proven, profitable strategy can give you the confidence to stick with it and realize that the odds of success are in your favor.
A proven, profitable strategy of course is different than a box of magic. Nothing will ever preclude you from having another losing trade. But using sound and tested stock-picking rules can help you beat the market over and over again.
2009
This year, thru the first week of June 2009, the Filtered Zacks Rank2 strategy, using a 1-week holding period, is up 55.1% vs. the S&P 500's 2.1%. It holds 5 stocks in its portfolio at a time. And it's a pretty easy strategy to trade. But you will be rebalancing your portfolio weekly. So if you’re an active trader, you'll love it. But even if you're not an active trader, seeing the stocks that are being picked is exciting to watch.
Parameters
There are 3 items that go into this screen:
* Zacks Rank = 1
As you know, the Zacks Rank is one of the best ranking systems out there. Since 1988, (over the last 21+ years) the Zacks #1 Rank stocks have shown an average annual return of over 26.3% a year. This screen starts off by focusing in on these.
* % Change Current Quarter Estimates over 4 Weeks > 0
This item is important because, while the Zacks Rank already looks at the Current Year's Estimate Revisions and Next Year's Estimate Revisions, this added component looks at the more immediate future, which is the Current Quarter. And by saying greater than zero, we're excluding any company with a negative revision.
* % Change in the Average Broker Rating over 1 Week = Top # 5
This means I'm looking for the 5 stocks with the biggest or best change in their average broker rating. In other words, brokers have been upgrading the stocks. And while I don't really follow broker recs. per se', since I believe they're skewed to the upside, I do like to see the change in the rating. Are these guys getting more bullish or less bullish? This is good to know. So I want to make sure the average broker rating has gotten better, or at least not gotten worse, over the last week. These three items combined produce some very powerful results.
Here are 3 of the stocks that qualified for the Filtered Zacks Rank2 strategy on 6/15/09:
PVH - Snapshot Report Phillips Van Heusen Corp.
BVF - Snapshot Report Biovail Corp.
KONG - Analyst Report Kongzhong Corp.
Get the rest of the stocks on this list and start trading the Filtered Zacks Rank2 (or any of our other strategies) in your own account. Remember, the key to successful screening is in discovering those screens that have produced profitable results in the past. And that is exactly what you get with the Research Wizard stock picking and backtesting program.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Kevin Matras is the Research Wizard Product Manager and weekly contributing Editor at Zacks Investment Research who creates and writes the Zacks Commentary Screen of the Week and Know Your Options. For more information, visit www.zacks.com.
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