How I Actually Find Stocks Worth Trading (And Why Most Traders Do It Backwards)
I think a lot of new traders are lazy. They want someone to tell them where to put their money. They put more faith in a random bloke on a forum than in their own ability to think. I know this because I was one of them.
The most common question I see on trading forums is "Where do you get your ideas?" The answer is different for everyone. I've heard of a trader who used to hang around shopping centres counting carrier bags — more bags, more consumer spending, consumer stocks worth a look. Another reads the FT cover to cover every morning. I've explored plenty of methods over the years.
But the best way I've found? Filter from the top down.
At Omera, we're trend traders. We need to find the trend. And you find the trend by starting big and working small — market, then sector, then industry, then stock. Not the other way round.
Step One — What Is The Overall Market Doing?
Before I look at a single stock, I check the four main US indices. Not because I'm trying to be a macro economist, but because the market is the water you're swimming in. You need to know if the current is with you or against you before you dive in.
S&P 500 — the benchmark. 500 large US companies. When people say, "the market is up", this is what they mean. Start here every single time.
Nasdaq 100 — tech and growth heavy. NVIDIA, Apple, Microsoft, Meta. This is your risk appetite gauge. Confident market, Nasdaq leads. Scared market, Nasdaq gets sold the hardest and fastest.
Russell 2000 — small caps, and the one most beginners completely ignore. Small companies are more sensitive to borrowing costs and domestic economic conditions. Russell leading upward means the rally has real broad participation behind it. Russell lagging while the S&P looks fine means only the big boys are holding it up. Thin ice.
Dow Jones — 30 blue chip industrials. Old school, less representative, but a useful sentiment anchor. Less volatile, so when it moves big, something significant is happening.
The relationships between them matter more than any single reading:
- All four up together — broad risk-on, good environment for swing setups
- Nasdaq leading, Russell lagging — narrow rally, be cautious
- Russell leading — underrated signal, genuine broad participation, this matters
- Nasdaq dropping, Dow holding — rotation out of growth into defensives, nervous but not panicking
- All four dropping — risk-off, sit on your hands
Sixty seconds every morning before you do anything else. Check where each index sits relative to its 50- and 200-day moving averages. Are we making higher highs and higher lows, or breaking down? That one check frames everything that follows.
Step Two — What Sectors Are Moving?
Once I've got a feel for the overall market, I want to know where the money is moving inside it.
My tool of choice is Finviz. It's free. The heatmap alone is worth more than half the paid tools I've tried.
Which brings me to something I want to get out of the way. I'm probably the tightest trader you'll ever come across. The industry will try to sell you everything — data terminals, premium screeners, level two feeds, scanners, signals services. Most of it is noise. Here's my entire paid toolkit:
- TIKR — US stock research, fundamentals, valuation, earnings transcripts. Worth every penny.
- Sharescope — UK stocks. Might not renew it. Don't use it enough and most of what I need I can find free anyway. Brilliant if you're more UK-focused than I am.
- Webull Level 2 — £3.99 a month. Barely touch it. Some traders swear by level two data. My strategy has never really benefited from it.
That's it. No Bloomberg terminal. No £200 a month "edge" that probably isn't one.
I still make money.
So, Finviz. I check what sectors have been moving over the week, the month, the quarter.
I look at which companies inside those industries are moving.
Then I filter out the rubbish. Anything under a billion in market cap, gone. Anything with a stock price under $10, gone. Penny stock territory is a different game and not one I'm interested in playing.
What I'm left with is what's been moving with real volume behind it. Where is the crowd? Because as a trend trader, the crowd is your friend — you just want to find them before they get too loud.
If the list is still too long at that point, I'll tighten it further. EPS growth, PEG ratio, and technical position. Narrow it down to the names worth actually spending time on.
What I'm Seeing Right Now
Tech is making a serious comeback. Whether it lasts I have no idea — that's what stop losses are for. But right now the momentum is there.
Within tech, it's the components and electricals sub-sector that's standing out.
And that makes sense. The real money in tech right now is flowing into infrastructure. It also reflects something broader — a market shift away from future promises from the big AI players and towards companies generating real cash flow today. The picks and shovels trade.
So I filtered down to the stocks performing well in that space and started working through the list.
SNX — TD SYNNEX — is clearly the leader. It's already extended:
We've missed the clean entry. That's fine. After a bit of research — which I'll be publishing shortly, so like and subscribe if you don't want to miss it — it goes straight onto the watchlist.
Avnet is a well-run business sitting right in the middle of this recovery cycle. The fundamentals are improving, the last earnings call confirmed the growth story is real, and the valuation is roughly fair at current prices.
But I'm not taking the trade.
The problem is simple. Avnet is a distributor. It doesn't make anything. It buys components, sells components, takes a thin spread, and passes price increases down the chain. That business model means gross margins of 10-12%, which means the market is never going to re-rate it the way it does actual manufacturers when a sector turns. Distributors don't get the glory.
And when I look at what else is in the same theme, there are just better options. TD SYNNEX posted a 43% EPS beat. It's got partnerships with all five top US hyperscalers through its Hyve division. It's trading at 10-12x earnings. CLS and APH are both in the same sector with higher margins, stronger EPS growth, and far more re-rating potential when the cycle really gets going.
When you can own the companies making the things, there's not much logic in owning the company driving them to the door.
I'm going to work through the rest of this list and find the stock or stocks worth adding as a proper swing trade setup. That research is coming. Stay with me.
