ABOUT THE ROBO-ANALYST OPINIONS
The Robo-Analyst software and its opinions generated are derived from years of live trading and back-testing different indicators in combination with the goal to produce accurate results over all stocks, and not just a few. Our goal was to create a tool that would benefit all levels of investors; as a teaching tool for novices, to a time-saving confirmation tool for professionals. We found in our back-testing that the most widely-used indicators and technical analysis teachings can produce remarkable results across all markets when correctly combined. The "proprietary, secret sauce" in the Robo-Analyst's accuracy lies in how we "tweaked" these indicators to make them more "leading" then "lagging" the markets and the order in which we cross-reference them.
Some of the Indicators we use that work well together include:
Open-to-close price relationship
TIME FRAMES USED
The data analyzed for the opinions are broken down into the following three time frames:
Long-Term: Expected move over the next 1-6 months or until Long-Term Outlook changes.
Short-Term: Expected move over the next 3-30 day period or until Short-Term Outlook changes.
Daily: Expected move over the next 1-3 days or until Immediate Outlook changes.
THE TECHNICAL RATING SYSTEM
The Robo-Analyst's Technical "Ranking System":
EXTREMELY BULLISH - Multiple indicators suggest the stock should go higher relative to the time frame of the opinion.
BULLISH - A few technical indicators suggest recent price action is positive and/or will continue positive for that specific time frame.
OUTPERFORM - Indicators are generally positive and not suggesting a change in the recent action, therefore, the stock should continue to move along with the market or outperform the market for that specific time frame.
HOLD - The indicators are not confirming any definite direction or change in direction.
UNDERPERFORM - Indicators are generally neutral to negative and not suggesting an upturn.
BEARISH - A few technical indicators suggest the stock may turn negative and/or could continue lower for that specific time frame.
EXTREMELY BEARISH - Multiple technical indicators confirm the stock should go lower specific to the time frame selected.
AN IN-DEPTH LOOK AT THE OPINIONS
The Long-term Outlook looks at a one-year window (daily bars) using many of the most popular technical indicators used among traders to determine the outlook of a stock. We have altered some of the indicators' formulas slightly if we found through back-testing we could improve their results over all stocks. The Long-term Outlook focuses on key support and resistance levels, moving averages, Fibonacci fans and other indicators to determine the direction of the long-term trend. We found long-term trend changes are surprisingly predictable with the right combination of indicators across all stocks. The Long-term Outlook is more accurate at confirming a probable move if the short-term opinion and volume indicators agree; to keep from entering or exiting prematurely. The Long-Term Outlook will rarely give a "HOLD" rating when a stock is trending, when it does, it's a warning sign the long-term trend is changing.
The Short-Term Outlook uses the same technical indicators as the long-term, but adds several additional "short-term" indicators, such as candlesticks, short-term stochastic, and others, to look at a short-term window of time ranging from a few days to a few weeks. We have tweaked these indicators to help make them more “leading indicators”, for example; the short-term stochastic indicator can be accurate, but many stocks may remain overbought or oversold for long periods giving false signals, so we "tweaked" our model to be more accurate in combination with other indicators when identifying a potential change in direction. The software will only identify a possible reversal if confirmed by several indicators.
The Daily Opinion uses volume and price action along with other important tools such as gaps, stochastic, key reversals and others to help predict the immediate action of a stock. The volume bars at the bottom of the price chart represent the number of shares traded each day. Volume is important when determining whether a price action or move will continue or be short-lived. Quite often when a stock move is accompanied by above-average volume, the stock will continue in that direction for the short-term. This is particularly true when an important support or resistance level is broken on high volume. If a stock move is accompanied by lighter than average volume, the move will many times be short-lived because the move lacks broad participation from the market. Generally, when the Immediate Outlook is confirmed by the Short-term Outlook, the analysis is extremely accurate. The Immediate and Short-term Outlook are used to generate our Daily Trading Ideas. Note, when there is an overwhelming balance of either Buys or Sells in the Daily Trading Ideas, the market usually moves in that direction. We track this with our Totty Market Timing Indicator.
TOTTY MARKET TIMING INDICATOR (TMTI)
This broad market proprietary indicator which can be added to the chart monitors over 10,000 securities to watch for key reversal points whereby a significant number of indicators confirm a specific security is reversing. It then compiles the total number of securities reversing to the upside and downside and generates a net number. Our default threshold number is 50/-50, which has historically identified all major reversals. It may also be used to identify short-term swings using 30/-30.
Each bar represents one unit of data (1 day in this case). The vertical size of the bar represents the high and low price for that day. The hash mark on the left side of the daily bar represents the price at which the stock opened on that day and the hash mark located on the right side of the bar represents where the stock price closed for the day.
The color of the bar represents the direction of the short-term trend. Short-term is referred to in this instance as a few days to a few months. If the bar is red, it means the stock's short-term trend is bearish (down), green is bullish (up), and blue is neutral.
The chart also displays the 50-day and 200-day moving price averages, two support levels (S1, S2) and two resistance levels (R1, R2).