stonka

How it works

Fixed rules instead of gut feeling.

Every Saturday, Stonka checks every share the same way. Here are the rules that decide whether a share makes the list, and how the results are counted.

From 1,000 shares to the list

A share has to pass every step. If it fails one, it is out. The first four steps are the same for both lists. After that, each list has its own rules.

Both lists

  1. In an indexThe share is part of the MSCI World (North America and Europe), the DAX or the MDAX.
  2. Listed in GermanyIt is listed on a German trading venue.
  3. Long enough on the marketThere are prices for at least 80 weeks.
  4. Enough tradingOn average, at least 5 million euro change hands per day.

Comebacks

  1. Home market not fallingIts home index, like the DAX, is not in a downtrend.
  2. Dropped hardIt is 15 to 50 % below its yearly high and fell especially fast lately.
  3. First sign of a turnLast week shows one of the patterns further down.
  4. Stop level close enoughIt is at most 12 % below the confirmation level.
  5. On the listSeen from the confirmation level, the chart target is at least as far away as the stop level.

Risers

  1. Home market risingIts home index is in an uptrend.
  2. Already risingIt is above its rising 30-week average, its 10-week average is above the 30-week one, and it is close to its yearly high and rising faster than its home market.
  3. Breakout or short pauseA breakout, or a pullback to the 10-week average that ends with one of the patterns below.
  4. Stop level close enoughIt is at most 10 % below Friday’s close.
  5. On the listThe six that did best compared with their home market over the past year.

Weekly candles from Monday to Friday, prices from the home exchange, euro prices at Friday’s exchange rate. More on the disclosures page.

More on both lists

Comebacks

The idea: after a big drop, selling pressure sometimes eases and the price turns.

Why 15 to 50 %? A smaller drop is not a real correction. A bigger drop can point to a problem in the company, so the rule leaves it out.

Fell especially fast is measured by the weekly RSI. It shows how strong the last price moves were. In the last eight weeks, it must have fallen to 35 or lower. This is called oversold.

Confirmation level
The high of the signal week. The signal only counts if the price rises above it in the new week.
Stop level
The lowest low of the last three weeks. Below it, the chart signal no longer holds.
Chart target
The 30-week average. The idea behind it: after a drop, prices sometimes move back toward this average. It is a projection from the chart, not a forecast.

Risers

The opposite idea: shares that are already rising.

Not too far up. The share is at most 25 % above its 30-week average. This leaves out shares that have already moved far from it.

Not too strong, not too weak. Its weekly RSI is between 50 and 75, so it is neither weak nor overbought.

Stop level
The lowest price of the last two weeks.
No chart target
The rules for risers set no upper level, only a stop level.

The patterns

Every weekly candle shows how the week went: open, high, low and close. Some shapes point to a change in mood. The lists do not name the pattern, but every share on them shows one of these.

Hammer
The price fell a lot during the week, but buyers pushed it almost all the way back up by Friday.
Bullish engulfing
An up week that wins back the whole loss of the week before.
Morning star
First a big down week, then a quiet week, then a clear up week.
Piercing pattern
After a down week, the price wins back more than half of it.
First up week
After at least four down weeks, the price closes higher than the week before for the first time.
Pullback
A rising share falls back to its 10-week average for a short time and turns up again.
Momentum
After a pullback to the 10-week average, an up week closes above the high of the week before.
Breakout
The price closes above all highs of the last ten weeks, in the upper half of the week’s range, with much more trading than usual.

Questions

What does “signal” mean here?

In technical analysis, a signal is a chart picture that meets certain rules. At Stonka it means that the weekly chart of a share matches all rules of a list. A signal is not a call to buy or sell and does not predict where the price goes.

How long is a list valid?

Only for the trading week after the scan. It is not updated after that, and its levels go stale. Only the lists of the last 8 weeks stay online, unchanged.

Does Stonka look at news or company figures?

No. The rules only know prices and trading volume. Profit warnings, takeovers or annual reports are left out; they belong to your own research.

How last week is counted

Stonka saves every list with its levels and does not change it afterwards. One week later, Stonka compares the new weekly candle of every share on it with these levels.

  1. Does the signal count? A comeback only counts if the price rose above the confirmation level during the week. It counts from the confirmation level. If the share opened above it on Monday, it counts from the opening price. A riser counts from Monday’s opening price, unless it opened at or below the stop level.
  2. Stop level reached? Then the signal ends at the stop level.
  3. Chart target reached? Then a comeback ends at the chart target. If both happened in the same week, the stop level counts. A weekly candle does not show which came first. The same applies if the price touched the stop level in the week it rose above the confirmation level.
  4. Otherwise Friday’s closing price counts.
  5. The result is the average of all counted signals, losers included. It is calculated in the currency of the home exchange, so exchange rates play no part, and fees and taxes are left out. It is a calculation on paper, not a real trade. Weeks calculated afterwards and never published as a list at the time are counted the same way and marked.

Version of the rules

The rules are in version 1. They change only by hand, never automatically. Every change raises the version and is listed here, and every list keeps the version it was made with.

How good is it?

Nobody can know that in advance.

Every week, the signals page shows how the signals of the week before did on paper, losers included. They are counted as described above. Past results say nothing about the future.

The trade calculator shows what is left after fees. Every card has a “Run the numbers” button that carries its levels over.

Not investment advice. Stonka is a tool for your own research. The lists are made automatically from price data. They know nothing about news, company reports or your situation, and all results are hypothetical. More on the risk notice page.