rwmill

Richard Miller (aka:rwmill) is a short-term trader, who calls his investment style the "triple screen method." This well-informed investor and Zacks $100K Challenge contender explained that every weekend he runs six screens based on IBD (Investor's Business Daily) fundamentals to ensure that he is dealing with a group of fundamentally sound stocks. This process narrows Richard's stock universe down to approximately 500 names. Next, the astute stock picker plucks out companies that have a Zacks Rank of 1 or 2 (Strong Buy or Buy). This further whittles his picks down to about 250. Richard mentioned that this step helps ensure that his list of stocks have earnings-related fuel for immediate movement. His last screen is based on two PEG ratios calculated for the next two years, using those years’ estimated growth rates to ensure value remains in his selections. This turns the list of 250 into roughly 135. During the following week, Richard monitors the technical patterns of his pared-down group of stocks and will buy primarily on pullbacks.

This type of meticulous research and selecting has helped Richard put together a Simulator portfolio that includes such holdings as Newcastle Investment Corp. (NCT - Analyst Report), Hewlett-Packard Co. (HPQ - Analyst Report), Geo Group Inc. (GEO - Snapshot Report), Fossil Inc. (FOSL - Snapshot Report) and GameStop Corp. (GME - Analyst Report). Discover this player’s whole portfolio by clicking here. Take a look at his entire trading history by clicking here.

What does he look for in a security?

Echoing what Richard stated regarding his investment style, the Simulator contestant noted that he looks at fundamentals, earnings revisions, valuation and technical formation.

He added, “On the short side, I look for a four or five Zacks ranking combined with an extremely low Put/Call ratio, which reflects bullish sentiment (a contrarian approach to shorting) that's recovering to a major area of resistance (50-day moving average, middle of large down gap or down wide-range candle).

How about selling?

“I sell based on a half position strategy. On the profit side, I target a 5% gain for the first half of the position then use a trailing two-day stop to sell the second half. On the loss side, I sell the first half on a technical signal and the second half at a 7.5% loss max,” replied Richard.

What is his market outlook?

This market watcher pointed out that history has thought investors that the next three months are usually the best of the year, and we are in the third year of an election cycle. "As a professional statistician, I know that the latter has been very significant since the late 1800's. Consequently, I'm very bullish for the rest of the year,” remarked Richard adding that he sees the Dow ending the year at 14,475.

Advice for market newbies?

The Zacks $100K Challenge participant, whose 90% return portfolio soared in to the top twenty from a ranking that was in the eighties not too long ago, urged market newcomers to use a methodology that is based on fundamentals, especially one that reflects earnings strength. Richard mentioned that valuation is important as well. He commented, “the best fundamental stock in the world can be recognized as such and be overpriced.” The successful short-term investor also recommended understanding how technical patterns reflect market psychology.