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StockCaster has been specifically designed to provide investors with information that assists in identifying stocks that are currently in play within the four major exchanges. The system provides a variety of relevant information to help users conduct comprehensive analyses of each security and to assess their strengths and weaknesses, as well as discern probabilities of future trends. You’ll notice that StockCaster not only provides a substantial number of technical scans to assist you in locating those stocks that are in play, but also contains a variety of “market maker level” data to help you isolate significant trends, support and resistance, and determine statistical probabilities of future movement.
Once you click on a specific exchange, you will then note that StockCaster displays a variety of time periods that you may select. These include Daily, Weekly, and Monthly. Depending upon your trading style, StockCaster provides scans of the stocks in play over these various time periods, so that you can see trends occurring across differing time periods and match these data to your individual trading style.
StockCaster has a direct feed to the market, which provides times and sales information for the majority of stocks traded. The trade data is aggregated and used to compute a variety of scans which measure trend dynamics and intensity. Each of the exchanges listed contains the same scan information concerning phase and intensity of movement, so that you can evaluate the securities traded in these markets in a similar manner.
After selecting the exchange you wish to review, it is recommended that you examine the different major categories of scans (Initial, Intermediate, Extensional, Short, and Fundamental) and familiarize yourself with the specific scan types associated with each category.
You will note that each major category contains scans that are designed specifically to measure differing types of trend movements and intensity. Some of these scans measure trend reversal (i.e., Close Above Lower Bollinger and Close Above 13EMA), while others reflect continuations of established trends (such as Close Above 26EMA, 13EMA Cross Above 26EMA, and Close Above 50EMA), and still others are designed to measure the extensional (or final) phase of an Elliot wave (like Close Above 100EMA and 50EMA Cross Above 100EMA).
StockCaster also provides users with the ability to review scans relevant to trade dynamics to help isolate “anticipatory” phenomena and to measure shifts in market dynamics. These scans are especially helpful in identifying forces that instigate new trends, before price changes signal technical movement. These can be found within the TradeTrend scan section and are much different than the information contained within the technical scans, in that they look for shifts in trader sentiment (TradeTrend Reversal, TradeTrend > 5, TradeTrend > 10, AskVol > 50%, BidVol < 25%, OVol < 25%, and DVol Double $Up).
Perhaps the most valuable aspect of StockCaster is attributed to the fact that it wasn’t built to replicate other market systems, but was actually designed from the ground up to provide average users with “market-maker” level information assets and resources. Broker-Dealers (i.e., market makers) employ analysts to interpret movements throughout the market. These analysts utilize a plethora of highly sophisticated software that is used to identify, assess, and interpret trending securities. StockCaster was built specifically to empower its subscribers with these same capabilities. This includes our new TradeTrend™, LagR™, TradeBreakdown Precentage, and TradeVolume indicators. These indicators are provided for each stock and can be viewed within the scans pages, the stock info page, or the trade dynamics profile.
While analyzing the data for stocks contained in any scan list, the first thing you’ll want to review is the TradeTrend. This new indicator was built specifically by StockCaster to simulate the information maintained by market makers and is used to measure the trade dynamics. Market makers use a feature that is called the “rack”, which contains a profile of all the buy and sell orders their firm possesses for a specific security. Because all of the existing buy and sell orders are displayed in the rack, market makers know in advance whether there are more sell orders than there are buy orders and often trade in between the spread to increase the likelihood of their success. Traders for these firms will apply this information to short a stock (if an abundance of sell orders are present) or to recognize a developing buy-oriented market, so they can change their trading practice to conform to the anticipated buy side pressure. StockCaster’s new TradeTrend indicator measures buying and selling pressure in a similar manner, but TradeTrend is more comprehensive in that it monitors each trade executed, as well as the Bid and Ask prices at the time of the transaction, in order to determine the trade's relative position. StockCaster then aggregates the total trades executed (for each specific time frame) to discern the relationship of buy transactions versus sell transactions.
This information can be extremely valuable in determining whether buying or selling pressure is being applied against the stock, and a reversal in TradeTrend (from zero to a significant positive value) can signal the beginning of trend reversal, well ahead of an actual price movement. Sorting a scan table by TradeTrend allows users to examine those securities with the highest degree of buying pressure which can be extremely helpful to the analysis process. This information can be valuable in determining stocks where investor sentiment is strong and buying pressure outweighs selling pressure that could result is an evaporation of existing sell orders. Such an event can result in a sudden and rapid increase in price per share as market makers increase their ask price based on the next highest Ask price in their rack.
The next most important consideration in the StockCaster system is the LagR value. LagR is an exceptionally powerful indicator because it measures the historical relationship between changes in the TradeTrend and the price per share of the stock, over time. The LagR indicator is based on the statistical principle of correlation coefficient, but with an intentional lag in the data. This lag in the data accounts for the delay (or lag) between increased buying or selling pressure and changes in the price per share that occurs during the next time period. The reason StockCaster uses a lag value is because changes in buying and selling pressure aren’t necessarily felt immediately in the price per share. These types of changes can evaporate existing sell orders or buy orders (depending upon the type of trades being executed) and eventually, continued pressure can exhaust the rack full of existing sell orders which then forces the price to advance to the next highest Best Ask value.
StockCaster provides a series of LagR values (LagR1 – LagR5) to help you assess the immediate and longer term correlations between price per share and TradeTrend. After finding a stock with a strong TradeTrend, next examine its LagR values. Correlations are measured on a 0 to 1 scale. If (for example) the LagR1 is .90 this suggests that there is a strong positive correlation between the TradeTrend and the price per share of the stock on the following day. A LagR1 value of .90 can be squared (multiplied by itself) to discern an 80% coefficient of determination. This means that over the measured history of the stock, as the TradeTrend increases, the price per share of the stock also increases on the next day. A LagR2 value of .87 would similarly suggest that the relationship between PPS and TradeTrend over a two day period is also strong. If you note however that the LagR3 (correlation between the TradeTrend and the PPS on the third day) drops to .45, it is reasonable to conclude that the stock has (historically) experienced only a two days upward move in price per share each time the TradeTrend reversed from zero to a positive value. This might suggest that an impending move in the price per share, based on increased buying pressure, will last for a minimum of twodays, based on historical trends and subside on the third day. As you can see LagR values can be helpful in determining the degree of relationship that exists between shifts in the TradeTrend and changes to the price per share.
Following examination of the TradeTrend and LagR values, the next step in the process would be to review the the Earnings per Share, Short Interest Percentage, Price to Earnings Ratio, and Shares Outstanding values for the stock. These data provide a synopsis of relative business strength and can also be influential in assessing upside or downside potential. StockCaster has conducted a series of correlation studies on the relative strength of these variables to stock price, and discovered that EPS regularly maintains the strongest degree of correlation to price per share (typically above .85), followed by Dividend, Shares Issued, and PE ratio.
StockCaster recommends a weighting for these variables as follows: EPS (4), Dividend (3), Shares Outstanding (2), and PE ratio (1).
The next step in the analysis process involves the assessment of support and resistance. This can be accomplished in a variety ways, but StockCaster uses exponential moving averages as a mechanism to assess these factors. EMA’s are similar in value to Fibonacci targets and can be of considerable value in (1) determining resistance levels if the EMA lines are above the existing price per share and (2) assessing support levels if the EMA’s are below the price. StockCaster has a created an innovative process for determining support and resistance referred to as the “Synchronic” process. Because there is a demonstrative interrelation between differing time periods and a stock’s upside or downside potential, StockCaster provides a Synchronic Charting option to help users determine support and resistance levels across the hourly, daily, weekly, and monthly time intervals.
The basic premise behind synchronic theory suggests that developing trends on the lesser charts (hourly and daily) may eventually give way to the pressures exerted by a larger time interval and subsequently, as support and resistance levels on the hourly and daily charts are surpassed, the support and resistance levels on the weekly and monthly charts come into play (as measured by the 13, 26, 50, and 100 EMA’s).
The transition of power from one time period to the next larger time period is a critical component of the StockCaster system and it is important to assess the degree of interrelation between these interval periods. Accordingly, StockCaster users are provided with a Synchronic Charting feature that contains side by side representations of the daily, weekly, and monthly charts that contain price, moving average lines, TradeTrend oscillator, and TradeBreakdown indicators. Users are encouraged to review this feature as part of the analysis process so that they can readily determine the support and resistance levels (13, 26, 50, 100, and 200 EMA’s) across all three time intervals. These important values can serve to illustrate where upside movement might stop, or a retracement may stabilize. Typically, as a price per share penetrates resistance on the daily charts, it will travel upward until it encounters the EMA lines on the next largest time interval, where it could stop and lose momentum, or penetrate (perhaps based on overwhelming buying power measured by TradeTrend) and progress toward the next largest EMA line.
Once you have reviewed and analyzed the stocks contained within the Initial, Intermediate, Extensional, and Short scans and rendered a judgment about future trend potential, StockCaster encourages that you add these stocks to your Watchlist. This feature has been specifically constructed to help you keep track which scan was responsible for your interest in the security and to help you gauge the accuracy of your predictions.
StockCaster provides a selection feature that lets you add the stock to either the Initial, Intermediate, Extensional, Short, or Other category and tracks changes in the price per share from the time of inclusion on the Watchlist to the present value of the security. The idea behind the Watchlist feature is not only to help you track stocks, but to provide a function that creates your own indexes instead of relying on someone else to provide a measure of market performance. You will no doubt discover two important conclusions as you use StockCaster. The first is that you are better at selecting stocks within one time interval than another, and secondly that often stocks will progress from one phase of movement to the next level. In other words, a stock added to your watchlist during the daily-initial phase, might transition to the intermediate and extensional phases of movement on the daily and (hopefully) even to the initial, intermediate, and extensional phases on the weekly and monthly time periods. Ideally, as your analysis ability progresses, you will become more proficient at selecting securities that have a higher probability of progressing through the various phases of movement, across multiple time intervals, which will result in a maximum return.
Now that we have explained the fundamental principles associated with StockCaster we encourage you to become part of the StockCaster family. Please feel free to use the Discussion Forum to ask questions about the various forms of analysis and to share with other StockCaster users your ideas and opinions.
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