CYCLEPEDIAThe trading encyclopedia
IT
James Marsden Hurst 1924—2005

Chapter 7.1 — How to Select and Track

Issue selection and tracking (Hurst Ch. 7)

Chapter 7 in one entry: why traditional selection is not enough, the total scanning → screening → stable funnel, and the tracking that lets no signal escape.

On this page

Who this entry is for — Of Chapter 1's four pillars, the method had already delivered philosophy and timing. This chapter delivers the other two: which issues to trade (selection) and how not to miss their signals (tracking).

Source: J. M. Hurst, The Profit Magic of Stock Transaction Timing, Prentice-Hall, 1970 — Chapter 7, How to Select and Track Trading Issues (pp. 114–122).

Prerequisites

Four pillars — this chapter realizes pillars 2 and 4.

Why traditional selection is not enough

In plain words — News, recommendations, most-active lists: they work, but they arrive late — when the stock is already halfway through its cycle, and the low-risk signal is a long wait away. Better a selection system born from the model.

"X" cyclicality makes many traditional selection routes unnecessary, but three remain possible: let stocks come to you via news and recommendations, then analyse; fish from the papers' tabulations (most active, extreme volume, big percentage moves); or — the book's way — start from the model. The first two share a structural flaw: by the time a stock reaches you that way, "it usually is well along on a major trading cycle", and you may have to analyse and track it for a long time before it offers the low-risk action signal you want.

The goals of model-based selection, verbatim: issues that "provide the highest probability of the greatest gain per trade" and "a high likelihood of generating a valid action signal in the very near future".

The chapter's funnel

HURST 1970 · CH. 7 The selection funnel From the whole board to the stable: total scanning, screening, stable CYCLEPEDIA DIAGRAM — EMICICLO 2,000+ — every NYSE + AMEX issue the weekend scan, “as fast as you can turn pages” 80–140 — scan candidates volume ≥ 10,000 shares/week · edge or mid-band signal imminent ~20 — after screening volatility (the queen) + stability factors 12–20 — the stable analyses kept current, issues ready to go TIME REQUIRED ~half a day a week STABLE OUTPUT 4–5 signals a day Capital should never wait for an idea: the stable already has one saddled.
From the whole board to the stable: each stage has its own entry.
Tap the four stages
Stage What happens Entry
Total scanning Two visual tests across the whole board, ~half a day a week → 80–140 candidates Total scanning and the stable
Screening Volatility (the queen) + stability → the elite of the flock Screening: volatility and stability
Stable 12–20 issues, analysis complete and current → 4–5 signals a day Total scanning and the stable
Tracking From weekly charts to real time, per the cycle traded Price tracking

Warning — The proportion the chapter states twice: profit depends "considerably more" on skill in applying the model than on selection. Selection does not create the edge: it concentrates it — on readable, volatile issues near a signal.

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