Stock Selection & Scanning

Most education teaches how to trade a chart. This covers the step before that: how do you find the chart in the first place? Out of thousands of stocks, only a handful are “in play” on any given day, and finding them is a skill of its own — stock selection (deciding what qualifies) and scanning (using software to surface those candidates in real time).

There are two broad approaches, and they sit at opposite ends of the market. We'll use two well-documented practitioners as examples: Ross Cameron for bottom-up intraday scanning, and Ariel Hernandez for top-down swing scanning.

Approach 1 · Bottom-up scanning (intraday momentum)

The bottom-up trader scans the whole market for stocks showing a specific “anatomy of a mover,” then trades the cleanest ones. Ross Cameron of Warrior Trading scans roughly 5,000 stocks down to often fewer than ten candidates a day using four criteria:¹

1Low float. Under 100 million shares (under 20 million ideal) — less supply means sharper supply/demand imbalances and bigger moves.
2High relative volume (RVOL). At least 2× the average for that time of day — unusual interest. (He uses 5× as a stricter filter.)
3A catalyst. Breaking news — earnings, a PR, an FDA decision, an activist — or a clean technical breakout.
4A strong, unobstructed chart. Above its moving averages with no nearby resistance. Price often $1–$20, where retail flow concentrates.

The tool that surfaces these is a scanner. Cameron runs three types — a momentum/“surging up” scanner (highest relative volume right now), a reversal scanner, and a pre-market gapper scanner. A key point he stresses: scanners find the stock; the trader still has to read the chart and time the entry (for him, a bull flag or gap-and-go).¹

Approach 2 · Top-down scanning (swing leadership)

The top-down trader starts with the whole market and works downward: which sectors and industry groups are strongest, then which individual stocks lead those groups. This is the William O'Neil / CAN SLIM lineage — buy the leading stocks in the leading groups. Ariel Hernandez describes scanning by sector themes and industry groups, constantly asking “where is money leaving, and where is it going?” to align with institutional money flow — “following the money.”²

The top-down funnel

1Market. Is the broad environment supportive (risk-on) or not?
2Groups. Which sectors/industries show the strongest relative strength — money flowing in?
3Leaders. Within those groups, which individual stocks are the clear leaders by relative strength and fundamentals?
4Setup. Wait for one of those leaders to offer a low-risk entry (e.g., a base breakout or a pullback).

Professional frameworks for picking leaders

Two of the most influential professionals turned top-down leadership into concrete, screenable rules — and both rest on one idea: relative strength. A stock's RS rating measures its 12-month price performance against the whole market; an RS of 80 means it has outperformed 80% of all stocks.

William O'Neil — CAN SLIM (the “L” is for Leader)

O'Neil's study of the best-performing stocks of 1953–1985 found they averaged an RS near 87 before their big advance. His rule: buy only stocks with RS ≥ 80, and only the best two or three names in a leading industry group — because “leaders become bigger leaders” while laggards rarely catch up. CAN SLIM pairs this with strong earnings, institutional sponsorship, and overall market direction.³

Mark Minervini — the Trend Template (a ready-made screen)

Two-time U.S. Investing Champion Minervini filters for leaders with an 8-point Trend Template — every point must pass at once:

✓Price is above its 50-, 150-, and 200-day moving averages.
✓The 50-day MA is above the 150-day, and the 150-day is above the 200-day.
✓The 200-day MA has been trending up for at least a month.
✓Price is within ~25% of its 52-week high (and well above its 52-week low).
✓RS rating is 70 or higher — ideally 80–90+.

This is essentially a filter for a confirmed Stage-2 uptrend (Weinstein). Inside his SEPA method (Specific Entry Point Analysis), Minervini then waits for a low-risk entry — often a Volatility Contraction Pattern (VCP) breakout — only when price action, earnings, and a catalyst all line up.⁴

Notice the through-line from Hernandez to O'Neil to Minervini to Weinstein: buy strength, in the strongest groups, confirmed by relative strength — the opposite of bargain-hunting.

Same tool, opposite ends

Both approaches answer the same question — “what's worth my attention today?” — but from opposite directions. The bottom-up scanner hunts individual extremes (a tiny stock up 80% on news); the top-down scan reads where capital is rotating and buys the leaders. One is intraday and frantic; the other is multi-day and patient. Most professionals lean to one based on temperament and account size.

An honest word on risk. Bottom-up small-cap momentum is among the highest-risk styles in trading. Warrior Trading's own disclosures cite research that most day traders are not profitable — one study found fewer than ~3% of day traders were predictably profitable. Scanning finds opportunity; it does not change the odds. Treat any candidate as something to study and risk-manage, never a recommendation.¹