Technical Analysis
Broadly speaking, the primary factor that makes the price of stocks fluctuate is simple supply and demand. The higher the demand for a stock, the higher its price; and conversely, the less demand there is for a stock, the lower its price.
Our technical analysis is based on the study of the recurring or repeated phenomena appearing in the price trend of individual stocks as a result of the supply and demand for those stocks as they are traded (bought and sold) on the open market of stock exchanges.
Our analytical software uses a 10-week moving average of the closing week ending stock price adjusted ahead in time. Plotted against this "TrendLine" (see below) are the week’s closing stock prices. When the stock's pricing trend crosses the trendline (blue line) sufficiently, it gives either a technical BUY(1) or SHORT SELL(3) Alert. For long positions, if the stock remains above the TrendLine after triggering a Buy Alert, the stock’s Status is "LONG" (green line). For short positions, if the stock remains below the TrendLine after triggering a Short Alert, the stock’s Status is "SHORT" (red line). If the stock triggers a stop loss(2), it is considered "OUT" (black line) until it triggers another trade Alert.
A key result of this analysis is the recommendation of when to exit, or get out of, a stock. Our software systems calculate a weekly stop loss price for each stock (gray line). This calculation is non-trivial and plays a critical role in how we capture profits and minimize losses. Our stop loss algorithm incorporates the statistical likelihood of the maximum pricing movement expected within the next trading week, based on time, price and historical volatility of each stock.
Each week, our software performs a three-year, week-by-week, analysis of each stock in the TurnerTrends database. We start back three years and run our analysis/recommendation algorithms one week at a time. This analysis is designed to be blind from any 'future' data, so it creates contemporaneous trading signals without the benefit of upcoming data. This is a weekly, iterative, refining process where we are continually updating each stock based on the most recent three-year history of data and prcing volatility.
In this example (Note: Data and buy/sell recommendations are actual results for this stock), a $2,000 investment in this stock returned more than $18,000 over a three-year period! This is a return of more than 900% over three years.
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