x

How It works?

We have created a 3 tiered rating system.
From a high level of abstraction, here is what each rating entails.

STRONG BUY

THINKING

SELL

Our Checklist

Market and Industry Group Analysis

We use a Point and Figure chart to assess the overall market. If the ratings within a specific market or group start to rise or drop, this is of course incorporated into the 3 tiered rating of the stock. The X’s and O’s values within the Point and Figure model are dynamically set based on historical trends and the number of stocks within the market / industry group.

Intermarket Analysis | Point and Figure Charts

Industry Groups and Intermarket Analysis

We have configured a proprietary grouping of industries that move together or inversely. For instance, we have asserted that if the gold stocks start to rise, the silver stocks are likely to rise in this scenario and vice versa of course. The system uses this configuration to rate stocks accordingly. Several of these proprietary multilateral groupings exist. Our groupings are constantly being updated by us and the system itself.

Intermarket Analysis | Market Sector | Industry Group

Trend Detection

We use a variety of moving averages to detect the overall direction of a trend. The longer the stock remains above or below a moving average, the stronger the trend. In addition, in order for a trend to be relevant, it must have a strong sustainability. This means that a simple breach of a moving average is alone not enough. The algorithm will probe the history of the stock and determine what amount of time is reasonable for the specific moving average. If all tests are passed, it then becomes a very powerful statistic for the stock. This will in turn affect the 3 tiered rating.

Trend | The Use Of Trend | Support and Resistance | Moving Average | Moving Average Crossover| DOW Theory

Major Trend

The major trend is simply defined as the long term trend of a stock. The system asserts that if the stocks major trend is up with a high sustainability with respect to the longer term moving averages, the market trend is up, and industry group trend is up then the major trend is likely to be on the rise as well. Conversely, the system asserts that if the stocks major trend is down with a high sustainability with respect to the longer term moving averages then the major trend is likely to be on the decline as well. This is how we incorporate the major trend in our 3 tiered rating.

Trend | The Use Of Trend | Support and Resistance | Moving Average | Moving Average Crossover | DOW Theory

Intermediate Trend

The system asserts that if the stocks intermediate trend is up with a high sustainability with respect to the intermediate term moving average, the market trend is up, and the industry group trend is up then the intermediate trend is likely to be on the rise as well. Conversely, the system asserts that if the stocks intermediate trend is down with a high sustainability with respect to the intermediate term moving averages then the intermediate trend is likely to be on the decline as well. This is how we incorporate the intermediate trend in our 3 tiered rating.

Trend | The Use Of Trend | Support and Resistance | Moving Average | Moving Average Crossover| DOW Theory

Minor Trend

The minor trend is simply defined as the short term trend of a stock. The system asserts that if the stocks minor trend is up with respect to the shorter term moving average, market trend is up, and industry trend is up then the minor trend is likely to be on the rise as well. Conversely, the system asserts that if the stocks minor trend is down with respect to the short term moving averages then the minor trend is likely to be on the decline as well. This is how we incorporate the minor trend in our 3 tiered rating. The minor trend inherently has lower sustainability than the intermediate and major trend since it is based on shorter term moving averages. This guarantees a fast reaction time for day traders.

Trend | The Use Of Trend | Support and Resistance | Moving Average | Moving Average Crossover| DOW Theory

Overbought vs. Oversold Condition

We use a variety of oscillators to assert this condition. This includes a line of best fit, price channelling, RSI (Relative Strength Index), MFI (Money Flow Index), and Bollinger Bands. This of course will affect the rating. These strategies will only be taken into consideration if the stock contains either a buy or strong buy rating. We do not recommend actively trading stocks with a hold / sell / strong sell rating. Despite that the biggest bull moves usually occur in bear stocks, we believe that the long term implications of such practices could be disastrous.

Oscillators | RSI | MFI | Bollinger Bands | Line of Best Fit | Price Channels

Major Reversal Patterns

The system can inherently detect the existence of such patterns within the price history and react accordingly. As expected, the ratings will automatically adjust to the added risk.

Reversal | Double Top and Bottom | Gravestone Doji | Tweezer | Head And Shoulders Pattern | Diamond Top Formation | Kicker Pattern

Major Continuation Patterns

The system can inherently detect the existence of such patterns within the price history and react accordingly. As expected, this will cause the rating not to change.

Continuation Pattern | Ascending Triangles | Decending Triangles