When looking into new investments or reviewing your current holdings, the main item you are looking at is return. You ultimately want to know what the stock or product will return to you. In the short term or if you trade, return is not necessarily as important because you are capturing the day to day movements of the company. However, looking at the long term, you want to know how the equity has performed, and that is when you will want to look at the one year and three year return.
There are many different products on the market that have underlying holdings that support the product, such as ETF’s and mutual funds. When looking at these funds, you can see the holdings and what makes the product, giving you an idea if this is a good fit. However, it is important to note the holdings turnover and how long the fund manager holds onto the stocks.
Executives are certainly the most profiled person in the company as the decisions and performance of the company and others rest on their shoulders. Of course they are not aware of all decisions being made if they are in a large corporation, but they still will ultimately be responsible for them, good or bad.
When looking for indicators, many people may not use the Parabolic SAR, but it could become a useful tool in your trading arsenal. SAR stands for stop and reverse and is used as a trend indicator that follows the current trend. If the trend is down, the SAR will be plotted above the candles and if the trend is up, the SAR will be plotted below the candles.
This data point is certainly a complicated one because you can look at it in either a statistical light or a matter of fact light. When you look at a company that is struggling, you can certainly tell by just how things are and by something simple as cash flow if they are going to succeed. Benjamin Graham, the most well known person of value investing searched for these types of distressed companies, but that is a story for another day. As stated here on Macroaxis, probability of bankruptcy should not be confused with the actual chance of a company to file for bankruptcy protection.
When looking at stock and companies, there are many ways to go about finding what their worth and their value, and a great place to search is by finding their current valuation. This data point could be in the form of enterprise value, which is probably the most common. Ultimately, the valuation of the company should give you an area of what the price of the stock should be, giving you a probably price target.
Similar to standard deviation, this is a way to gauge how far a data point is from the mean or where is should be speaking in loose terms. The mean deviation is the mean of that data you are analyzing’s absolute deviations around the mean of your data, or the average distance from the mean. So, similar to standard deviation, it is telling you where the data should be and when to be alert that is has gone too far from the average or mean.
Many of you I’m sure have either looked at mutual funds and ETF’s or invested in them for various of reasons. It could have been you enjoyed the returns and low expense ratios, but have you ever looked and reviewed what the funds hold. Equity position weight is the weighting of the equities that make up the fund that is being invested in. For example, when you look at a fund that tracks the S&P 500, you would expect to see that fund have similar weighting to that of the S&P 500, and you can review this for yourself.
When looking at equities and other return metrics, a popular one many glance as is year to date returns, which is exactly what is says. Year to date returns is quick measurement that you can compare against others across the board. This data point in itself provides value, but it should not be relied upon because it does not tell the whole story. The year to date returns could be slowed or lower for reasons such as acquisition costs hit, which for the short term appears bad but the long term it appears great.
As simple as the title says, the potential upside is how much further you believe a stock or other asset is going to increase. There are many different ways to calculate this and decide on how much potential there is to the upside, so we will go over several. It may be easy to decide a company will grow and increase in stock value, but how much or how far is a little trickier.
When you first hop onto a charting platform and look at the tools, you will note the various types of moving averages. You can essentially pick any average type for any given length of time. For this article, we will specifically go over the simple moving average and how you can use it in your investing and trading techniques. How the moving average is calculated is by adding up all the closing prices for the period you determine, and dividing them by the total number of periods you have chosen. Not that you will ever need to do this, it is nice to understand how the tool you are using works.
When looking at a stock or equity, there are several data points to keep in mind, from dividend yield to current ratio. Another data point you should pull into your research is the annual yield, which simply put, is how much money to company made per share, including dividends and other returns on that investment. Many people look at this as a way to gauge the company against others in the industry, but it may not tell the whole story. The company could have had a subpar year, but it could have been due to marketing efforts or restructuring.
The Aroon Oscillator is another in the long line of oscillators that many people have heard of and utilize. This particular indicator ranges between negative one hundred and positive one hundred, using zero as the mid point. As you can guess, a positive oscillator will indicate to you a bullish trend and a negative oscillator will indicate to you a bearish trend.
When looking at a candle chart, it can be confusing and difficult to determine where the chart may switch, but by looking for a hammer formation, it could boost your predictability. A hammer pattern is when a candle forms and trades lower than the open, usually significantly, but later closes near or sometimes higher than where it opened. This does not indicate a trend change necessarily, but it could indicate that the opposite side is gaining momentum and the trend could change at any moment.
When looking at a chart, there are many different ways to evaluate your options, and the linear regression slope can help you indicate the current trend of the chart. The data is plotted as a line and fluctuates between positive and negative numbers, indicating where the trend currently lies. If the line is in positive territory, that would indicate the market is in an upward trend and if the line is in negative territory, that indicates the market is a bear and trending downward. This tool may resemble momentum tools and can certainly be used in conjunction with those tools.