Using Zacks Rating with my screens

One of my top ten books for trading is Ahead of the Market by Mitch Zacks. Despite its shameless promotion of the Zacks website and ratings (who could blame him), the book is very helpful in showing some market moving concepts. The Zacks rank is a great tool. It rates stocks based on earnings surprise (which is explained very plainly and thoroughly in the book) which over time seems to be a good indicator of short term movement. The earnings surprise screen on AAII has produced gains of 1165.2% since 1998 which isn't too shabby.

I've been combining the Zacks indicator with some of my screens for nearly two years and the results have been pretty impressive. For example, since September of 2005 the combination of Zacks ranking and AAII's Zweig screen has made over 100% in gains while the Zweig screen alone has made about 23% during the same period. So far, picking just the stocks that rate a "1" on Zacks and rebalancing weekly seems to really boost the performance of a very profitable screen.