StockCaster utilizes a variety of fundamental variables in conjunction with the technical scans to help traders develop a comprehensive analysis of relevant factors pertaining to each security. Technical analysis alone, although informative, is not sufficient to determine risk/reward. In addition to providing fundamental values for each security contained in the technical analysis and TradeTrend scan lists StockCaster also provides scans of fundamental variables as a separate series of scans that are run daily. These scans check for changes in reported values, as they are recorded.

Fundamental Scans
In addition to TradeTrend and technical event scans, StockCaster's fundamental scans are updated daily and represent changes in these areas as they are reported (depending upon availability). These scans attempt to identify specific trends related to the business of the company. These algorithms endeavor to isolate significant changes that affect the bottom line of the company and thus may trigger buying or selling activity from those investors who follow these types of activities. The first such scan in this category is related to Dividend Increase. This scan changes periodically and refers to those stocks that experienced a positive increase in the dividends paid to shareholders. This could be as a result of a 0 to .01 movement, or could be based on a percentage increase. The next fundamental scan involves a decline in the Price to Earnings ratio. This scan looks for improvements in the valuation of the company as evidenced by a change in the PE. The next scan in the series identifies those securities that experienced an EPS increase of (at least) 10% over the previous reporting period. Often considered a demonstrative indicator of business success, this scan provides users with a list of those companies that experienced dramatic growth in earnings over the previous quarter. EPS from Negative to Positive is the final scan in the Fundamental series and reflects all companies that have experienced a reversal from negative earnings to positive earnings in the quarter. This scan suggests an emergence from negative to positive earnings.

Dividend: The next most influential variable that StockCaster has detected is whether a company has issued dividends to its shareholders. A company that has significant earnings combined with expenditures lower than operating costs can subsequently be deemed as profitable. This doesn't necessarily result in the Board of Directors for that company deciding to issue a dividend to its shareholders, but (occasionally) corporations do recognize that in order to maintain the price per share of its stock, it is necessary to reward shareholders. Our research indicates that issuance of dividends to shareholders plays a significant role is maintaining stock valuation. Our most recent study revealed a correlation coefficient of .63 between price per share and the payment of dividends to shareholders. This variable serves to limit the number of shares for sale, which can enhance the upside potential of technical or fundamental trend. StockCaster.Net scans for Dividend Increase to identify stocks that have posted an improvement in this area.

Price to Earnings Ratio: Although PE ratios are a "derivative" computation and subsequently not considered as an accurate predictor variable in the overall equation, they are worth noting because of the perceived value that they hold among investors who "correctly" consider them of value in assessing the relative value of a security. A P/E Ratio greater than 20 reflects that the price per share of the stock may be inflated already. This is the "multiple" you often hear about in the stock market. A P/E Ratio less than 20 is generally seen by traders as a positive influence, leaving room for upside potential. Essentially, it is a good practice to note the PE of a company you are analyzing, because it may indicate that the stock is trading below or above standard multiple valuations. Highly speculative stocks with a PE around 40 -50 might be deemed as having limited upside potential because speculative valuations [based on future growth] have already been factored into the price per share. As earnings increase, this would lower the PE ratio, and perhaps warrant a re-evaluation of the importance of this variable. StockCaster.Net uses P/E Decline as the scan that searches for stocks which signaled a significant change in this fundamental area.

Earnings per Share: EPS has proven to be the single most highly correlated independent broad market variable in determining price per share. Routinely, studies indicate a correlation coefficient greater than .90, which suggests approximately an 82% coefficient of determination between price of a stock and earnings. This means that as EPS rises, there is a corresponding increase in the price of security in about 82% of the cases. Any EPS with a positive value is beneficial. Companies that have demonstrative earnings and relatively low operating costs, might be considered more likely to warrant a high price per share. Year over year increases in EPS is also a significant indication of price potential. StockCaster.Net provides two EPS related scans to provide information about changes in this area: EPS Negative to Positive and EPS > 10%.