The Zanger Scan: How to Find Stocks Poised for Explosive Moves

The Hunt for the Next Market Leader

Dan Zanger's ability to consistently identify stocks on the verge of explosive moves is not a matter of luck; it is the result of a rigorous and systematic screening process. He is a master hunter, constantly scanning the market for the next big winner. His process is a blend of fundamental and technical analysis, designed to identify companies with both strong growth prospects and the technical characteristics of a stock that is under institutional accumulation. By combining these two approaches, he is able to zero in on the small handful of stocks that have the potential to generate significant returns.

Zanger's screening process is not about finding undervalued or out-of-favor stocks. He is a momentum trader, and he is only interested in the strongest stocks in the strongest sectors. He is looking for the leaders, the innovators, the companies that are changing the world. These are the stocks that have the potential to go on a multi-month or multi-year run, and these are the stocks that Zanger wants to own.

The CAN SLIM Foundation: A Nod to the Master

Zanger's screening process is heavily influenced by the work of William O'Neil, the legendary founder of Investor's Business Daily and the creator of the CAN SLIM methodology. Zanger attended one of O'Neil's seminars in the late 1980s, and it was a significant experience for him. He has taken the core principles of CAN SLIM and adapted them to his own unique style of trading.

The "C" in CAN SLIM stands for Current Quarterly Earnings. Zanger looks for companies with a minimum of 40% year-over-year growth in their most recent quarter. The "A" stands for Annual Earnings Growth. He wants to see a minimum of 25% annual growth for the past three years. The "N" stands for New Products, New Management, or New Highs. Zanger is looking for companies that have a catalyst, something that can propel the stock to new heights. The "S" stands for Supply and Demand. He prefers stocks with a smaller float, as this can lead to more explosive moves. The "L" stands for Leader or Laggard. Zanger only wants to own the leaders in their industry group. The "I" stands for Institutional Sponsorship. He wants to see that the big money is buying the stock. And the "M" stands for Market Direction. Zanger will only be aggressive with his buying when the overall market is in a confirmed uptrend.

Zanger's Technical Filters: The Final Cut

While the CAN SLIM methodology provides the fundamental foundation for Zanger's screening process, it is his technical filters that are the final cut. He is a master chart reader, and he will only trade a stock if it is setting up in one of his signature chart patterns. He is looking for stocks that are emerging from a cup and handle, a flat base, or an ascending triangle. These patterns are a sign that the stock is under institutional accumulation, and they are the trigger for his entry.

In addition to the chart pattern, Zanger also has a number of other technical filters that he uses. He wants to see the stock trading near its 52-week high. This is a sign of strength and momentum. He also wants to see a high Relative Strength (RS) Rating, which is a measure of a stock's price performance relative to the overall market. He typically looks for stocks with an RS Rating of 90 or higher. And, of course, he wants to see a massive surge in volume on the breakout day. This is the final confirmation that the institutions are on board.

The Daily Routine of a Master Hunter

Zanger's screening process is not a one-time event; it is a daily routine. He spends hours each night scanning through thousands of charts, looking for the next big winner. He has a top-down approach, starting with the overall market, then moving to the sectors, and finally to the individual stocks. He is looking for the strongest sectors, and then he is looking for the strongest stocks within those sectors.

His daily routine is a evidence to his dedication and work ethic. He is not a passive investor; he is an active trader who is constantly on the hunt for the next opportunity. This relentless focus is a key reason for his long-term success. For those who want to emulate Zanger's success, it is not enough to simply learn his chart patterns. You must also be willing to put in the time and effort to develop a rigorous and systematic screening process.