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Why a fine-tuned Group/Sector structure is essential for identifying good trading opportunities

March 17, 2016group and sector, matchmaker, reports, Stock tradingadmin

Index Methodology Overview

This paper was prepared to assist subscribers/investors with an understanding of the investment concepts behind the construction and use of the FATI® Sector/Group Index.

Key Concepts

Data Dependence

The investment world is more data dependent today than ever before. This applies to both technical or fundamental data. The individual stock universe is comprised of approximately 16,000 stocks, of which 8,000 have quasi-reliable technical and fundamental data available. Even a universe of 8,000 stocks is extremely large and very hard for any investor to manage.

One of the risks with large amounts of data, of any type, is its quality. If we use low quality data, it could create incorrect outputs used in your investment decision process. There is an old adage that applies here and most have heard it before: Garbage In – Garbage Out. The quality of data and the ability to manage this data is paramount in the investment management process.

Sector/Group Structure

Many of the available Sector/Group Indices have, what is called, ‘limited participation’. Some of the industries groups contain only one or two stocks. The FATI® Sector/ Group Index is designed to maximize the number of issues in each industry group. For example, a major index provider has an index with 60 industries and an average of 8.3 stocks per industry. If you look closely you will find over 10% of the industries are comprised of only one or two stocks. Hardly a representative sample. The FATI® Sector/Group Index averages over 44 stocks per industry and no less than 6-7 stocks on average in an industry group. This gives investors a more accurate representation of each industry. The index also broadens the number of sectors from the industry average of 10 to 17 sectors. This was done to improve the granularity of the index and make it easy to identify investment opportunities.

Influential Factors on the Markets

It is a well-known fact approximately 90% of the volume in the equity markets come from institutional investors. These investors include mutual funds, pension plans, insurance companies and hedge funds Due to the large size of the portfolios they manage, it may take weeks, if not months; for them to build a position in a stock. Remember, these investors try to buy or sell in a stealth manner to avoid tipping their actions and having the price pushed up or down before they have finished acquiring or disposing a position.

Since institutional investors have such a significant influence on the market, it only makes sense to focus on the stocks they watch and trade. We conducted a poll to determine if there were a common, and simple, set of criterion which could be used to narrow a list of over 8,000 stocks. At the same time, try to determine what the average investment manager’s universe of stocks is comprised of. Institutional analyst’s standards are high when it comes data requirements. If those standards are missing from the data of a company, they won’t consider the company for investment potential. Remember Data Dependence from above. ‘Garbage In – Garbage Out’.

The Search

The Poll and Results

The poll was conducted from a random list of investment managers. Armed with the data collected from the investment managers a plethora of test screenings were performed. Each screening was reviewed to determine the data available, data completeness and data quality, both fundamental and technical. After exhaustive testing, a final list of criterion was selected. The final screening using the selected criterion was performed and compared to several investment manager’s universe of stocks. The results showed, on average, the final screen captured 86% of their universe of stocks. Some higher some lower.

Below is the final criterion used in the construction of the FATI® Sector/Group Index.

Average Daily Trading Volume >= 100,000 shares
Current Price >= $5.00
Number of Analysts in Average Broker Rating >= 2
Market Cap Valuation >= $100 million

The index is updated once a month using the criterion listed above. In any given month as many as 20-300 stocks may be added and/or deleted from the index. The number of issues in the index has ranged between 2,500-3,000 stocks. By narrowing the number of stocks in this manner, the fundamental and technical data was more plentiful, more accurate and more complete.

Putting it All Together

Knowing the key concepts and the criterion used in the construction of the FATI® Sector/Group Index, let’s put it all together and answer the question.

“Why Use the FATI® Sector/Group Index?”

The index provides investors with:

1. a list of stocks institutional investors watch and trade.
2. a higher quality Sector/Group structure for better investment decisions.
3. market capitalizations ranging from Mega Caps to Nano Caps.
4. the elimination of low priced / low quality stocks with poor quality data.
5. simple maintenance of the index and fundamental data. Download and Use.

One Last Thought

There are two generally accepted approaches to investing. Fundamental and Technical. Which is better is not up for debate here, but instead consider the following;

Fact, the majority of institutional investors purchase companies based upon strong fundamentals and earnings.

Professional Traders focus on technical indicators, patterns and news events to determine when to buy or sell a stock.

Why choose between two methodologies?

Don’t, use both.

First, use the FATI® Sector/Group Index to focus on the stocks institutional investors are watching and trading. Next, screen for companies in the Index with strong fundamentals and earnings. Lastly, use technical analysis to determine when to buy or sell the fundamentally screened stocks.

FATI® Sector/Group Index

Fundamental Data

Technical Analysis

MORE PROFITS

Find out how you can add FATI® Sector/Group Index + Fundamentals to your trading arsenal

or call sales at 1-800-332-2999

Higher Highs and Lower Lows

March 10, 2016EDS, indexes, Stocks & Commodities traders tips, technical indicatoradmin

The AIQ code based on Vitali Apirine’s article in February issue of Stocks and Commodities, “Higher Highs and Lower Lows,” is shown here.

The code provided computes the indicator values for the HHS and LLS indicators as well as allowing us to plot the indicator on a chart.

Figure 8 shows the indicator on a chart of Align Technology (ALGN).

FIGURE 8: AIQ. Here, the HHS and LLS indicators are shown on a chart of ALGN.

EDS code is shown below.

!HIGHER HIGHS AND LOWER LOWS

!Author: Vitali Aprine, TASC Feb 2016

!Coded by: Richard Denning, 12/09/2015

!TradersEdgeSystems.com

AIQ monthly FREE scan – get yours now

March 3, 2016Uncategorizedadmin

For years the fundamental module in TradingExpert Pro has provided
a unique trading strategy tool for filtering stocks. These include

·
Advanced weighting the impact of different fundamentals

·
Quick build of reports and lists

·
Chart list from fundamental reports

·
Rank and tag tickers so you’ll always know where they
stand fundamentally

Each month we’ll be providing one or two insightful scans for FREE with
accompanying list files where appropriate that you can download and use in your
TradingExpert Pro.

March 2016 screen identifies stocks with EPS momentum.
Stocks which will likely see earnings per share growth over the next two
quarters.

We’ll need your name and
e-mail address to get you access to the AIQ list files and scan
results. There are several other scans also available for you after you
register, including

·
Under Valued High Yielding Stocks, best used when there has been a market
correct of 8-10%.

·
Stocks with a Price to Sales ratio below the median for its Industry show
greater returns.

Visit the AIQ home page
at http://aiqsystems.com and fill out the form

Yes please I’d like to receive AIQ Data Power

Packs FREE scans or list each month

The most popular use of the fundamental data is in
combination with technical strategies in the Expert Design Studio. What better
way to hone in on candidates than to combine both approaches in one strategy
that you can run every night.

Now with the launch of the AIQ Data Power Pack FATI®, you can get updated fundamentals each
month directly into your TradingExpert Pro again.

Over 4400 Charts with instant click to 60 fundamentals fields

Unleash the power of fundamental

ranking with any number of strategies

Suppose
I want a list of stocks to short that are fundamentally weak what would I look
for?

How about a
High Risk, High Debt strategy?

This
strategy finds stocks that are having a hard time meeting their day-to-day
obligations. It finds stocks with the lowest quick and current ratio. The
lower, the more debt and liabilities and the less able a company is to pay
current debt. Add in a high debt to equity ratio and rank them all equally.
You’ll have a list of stocks that are worth keeping an eye on for a technical
entry to the short side.

Here’s
Charter Communications, the top high risk high debt ticker on 2/18/16

Build a technical and fundamental strategy in Expert Design
Studio and run it every night

EDS
allows you to design, test, and automate virtually any trading idea with the
point-and-click interactive trading library and pre-built strategies that have
been fine-tuned by our analysts to produce outstanding results.

With the FATI® fundamentals fields, you can add in another layer of screening
to your technical screening and uncover hidden gems in your database.

Included
with your fundamentals FATI® Sector and Group Structure and Extra bonus

FATI® Market Capitalization

LEARN MORE at http://aiqsystems.com/FATI_and_fundamentals.html

AIQ announces the return of fundamental screening to TradingExpert Pro

February 19, 2016Uncategorizedadmin

Dear Trader,

For years the
fundamental module in TradingExpert Pro has provided a unique trading
strategy tool for filtering stocks. These include

·
Advanced weighting
the impact of different fundamentals

·
Quick build of
reports and lists

·
Chart list
from fundamental reports

·
Rank and
tag tickers so you’ll always know where they stand
fundamentally

The most popular
use of the fundamental data is in combination with technical strategies
in the Expert Design Studio. What better way to hone in on candidates
than to combine both approaches in one strategy that you can run every
night.

Now with the
launch of the AIQ Data Power Pack FATI®,
you can get updated fundamentals each month directly into your
TradingExpert Pro again.

Over 4400 Charts with
instant click to

60 fundamentals fields

Here’s the
entire list of fields available on 4400 stocks, updated each month and available in
AIQ Charts, Fundamentals and Expert Design Studio.

·
Options

·
Shares Outstanding (mil)

·
Sales ($mil)

·
% Held by Institutions

·
% Held by Insiders Net

·
% Chg Holdings 12 Wks Market Cap ($mil)

·
Current Ratio

·
Avg Daily Vol 20 days

·
Beta

·
Avg Broker Rating

·
No. in Rating

·
% Change Completed Qtr Est – 4 wks

·
% Change Curr Qtr Est – 4 wks

·
% Change Next Qtr Est – 4 wks

·
% Change Curr Fiscal Yr Est – 4 wks

·
% Change Next Fiscal Yr Est – 4 wks

·
Est EPS Growth Current Year

·
Est EPS Growth Curr & Next Yr

·
Qtr EPS this Qtr/ prior qtr

·
Qtr EPS last Qtr/ prior qtr

·
Qtr EPS 2Qtrs ago/ prior qtr

·
Anl Sales this Yr/ Sales last Yr

·
2 Years Ahead Sales Growth

·
Cash Flow 5 Yr Avg

·
Div Yield

·
Indicated Anl Div

·
Payout Ratio

·
P/E using Curr FY Est

·
P/E using Next FY Est

·
Return on Equity

·
Return on Assets

·
Return on Investment

·
Inventory Turnover

·
Receivables Turnover

·
Asset Utilization

·
Debt/ Tot Cap

·
Debt/Equity Current Ratio

·
Market Capitalization

·
Quick Ratio

·
Cash Ratio

·
Interest Coverage

·
Cash Flow ($/sh)

·
Price/ Book

·
EV/EBITDA 12 Mo

·
P/E F1/ LT EPS Gr

·
Pretax Mgn 12 Mo

·
Net Mgn 12 Mo

·
Oper Mgn 12 Mo

·
Current Fiscal Yr Cons Est

·
# Anlst in Cons Current Fiscal Yr

·
Next Fiscal Yr Cons Est

·
# Anlst in Cons Next Fiscal Yr

·
Completed Quarter Cons Est

·
# Anlst in Cons Completed Qtr

·
Current Quarter Cons Est

·
# Anlst in Cons Current Qtr

·
Next Quarter Cons Est

·
# Anlst in Cons Next Qtr

·
12 Mo EPS before NRI

·
Piotroski Score

Unleash the power of
fundamental

ranking with any
number of strategies

Suppose I want a
list of stocks to short that are fundamentally weak what would I look
for?

How about a High Risk, High Debt
strategy?

This strategy
finds stocks that having hard time meeting their day-to-day
obligations.It finds stocks with the lowest quick and current ratio.
The lower, the more debt and liabilities and the less able a company is
to pay current debt. Add in a high debt to equity ratio and rank them
all equally. You’ll have a list of stocks that are worth keeping an eye
on for a technical entry to the short side.

Here’s Charter
Communications, the top high risk high debt ticker on 2/18/16

Build
a technical and fundamental strategy in Expert Design Studio
and run it every night

EDS allows you
to design, test, and automate virtually any trading idea with the
point-and-click interactive trading library and pre-built strategies
that have been fine-tuned by our analysts to produce outstanding
results.

With the FATI® fundamentals fields, you can add in another layer of
screening to your technical screening and uncover hidden gems in your
database.

Included
with your fundamentals

FATI® Sector and Group
Structure

Quality and Opportunity is right here. Stocks fitting the
fundamental criteria below are arranged into the FATI® Sector and Group
Structure and provided to you updated each month.

These lists contain stocks which have the following four key
characteristics.

Average
Daily Trading Volume > 84,999 shares
Current
Price > $4.99
Number
of Analysts Ratings >= 2
Market
Valuation > $99 million

FATI® Sector and
Group Structure – There
are approximately 2500-3000 stocks on average. They are broken down
into 17 sectors and over 60 industry groups.

Extra bonus

FATI® Market
Capitalization

The same list of
stocks as in the FATI® Sector & Group list broken down by market
capitalization into separate lists. Make your analysis
segment focused with ease.

Mega Cap > $50bn
Large Cap > $10bn < $50bn
Mid Cap > $2bn < $10bn
Small > $1bn < $2bn
Micro > $500mn < $1bn
Nano >$99mn < $500mn

Updated tickers, lists and fundamental data every
month for one price

$29.99/mo.

or call Sales: (800) 332-2999 1
775-832-2798 from outside the U.S.

E-mail sales@aiqsystems.com

Investment Grade Quality with High Yielding Income

February 17, 2016Uncategorizedadmin

Fixed income investors are
continually looking for high yielding investments with stability of principal.
It has been that way for decades. Today is no different either. For years, the
high yield bond market provided more than ample income for investors and in
some cases capital appreciation of their investment. That has all changed over
the past year.

Share prices of high yield
bond ETF’s have declined on average -15.33% over the past year while yields
have remained stable or increased in some cases due to price declines. Some
investors face another problem, where can they re-invest surplus income. Both
situations are very troubling for fixed income investors today.

Since the beginning of the
year investors have seen extremely high market volatility for a plethora of
reasons which we will not go into here. Despite all the hoopla in the news and
talk by pundits, fixed income investors questions have not changed. They remain
the same and they need answers.

Today, I am going to share an
idea which may address the fixed income investors questions. This is a little
known area to many investors. It is called Exchange Traded Debt (ETD’s or Baby
Bonds). They trade on the stock exchange like a stock, but they are actually
debt of corporations.

ETD’s or Baby Bonds are debt
issued by a corporation in denominations less than the normal bond denomination
of $1,000. In fact, most ETD’s are issued in $25.00 denominations. They all pay interest, usually quarterly,
unlike most bonds which pay semi-annually. There is no preferential tax
treatment on the interest paid.

Now, let’s look at
what happened over the past year (2/13/15- 2/12/16). Below are a few
interesting data points which support why investors may want to consider ETD’s
as an income alternative. Before we look at that data, keep in mind the ETD’s
selected are all investment grade securities vs. high yield bonds which are non-investment grade.

High Yield ETF’s * IG – ETD’s **

Average
Change in Principal/ Price Only -15.33% -2.83%

Average
Current Yield
6.91% 6.38%

Standard
Deviation
5.71 2.15

Ok, this all sounds great, but
what is the down side? The downsides are the spreads are a little wider than
one would expect. So, you do not want to use market orders when buying or
selling. Limit orders only. Next, you are investing in individual issues, so
you do not have the diversification of a ETF.

The key to investing in ETD’s
is to focus on investment grade issues. Investment Grade ETD’s carry a lower
default risk, yet they provide yields equal to high yield bonds. Below is a
sample of investment grade ETD’s. You see issuers like Prudential Financial,
U.S. Cellular, Tennessee Valley Authority and even Raymond James Financial.
Some ETD issues are even secured with real estate.

One last point here. In the
event of a corporate bankruptcy, bond holders (ETD’s) are in line ahead of
preferred and common stock investors. A small nuance, but something to consider.
I say this because some investors confuse ETD’s with preferred stocks. ETD’s
are not stocks, they are debt and pay interest. They just trade on the stock
exchange like a preferred stock or high yield ETF.

Notes:

* Data
compiled from a Composite of the 10 Largest High Yield ETF’s.

** Data
compiled from a Composite of 40 Investment Grade ETD’s.

AIQ TradingExpert Pro

World Leader in Intelligent Trading Software

All posts by admin

Why a fine-tuned Group/Sector structure is essential for identifying good trading opportunities

Higher Highs and Lower Lows

AIQ monthly FREE scan – get yours now

AIQ announces the return of fundamental screening to TradingExpert Pro

Updated tickers, lists and fundamental data every
month for one price

$29.99/mo.

Investment Grade Quality with High Yielding Income

Updated tickers, lists and fundamental data every month for one price

$29.99/mo.

Updated tickers, lists and fundamental data every
month for one price