New Members: Be sure to confirm your email address by clicking on the link that was sent to your email inbox. You will not be able to post messages until you click that link.

why no fundamental analysis rank available in Stockcharts.com for trading purposes?

When I run my momentum scans for stocks they generated stocks with great looking charts, high SCTR, high relative strength etc. However I have started to check the scan results against the Fidelity Stock Screener equity summary score from Thompson Reuters Starmine which gives an aggregate fundamental analysis rating of bullish, neutral, or bearish based on the sum of opinions of about 10 analyst firms rating on a stock.
Interestingly enough a significant number of the stocks generated by my momentum scans have bearish Starmine ratings. This brings up the question of when you are trading is it sufficient to only rely on technical analysis scans for generating trades. Why ignore the other half of the equation- fundamental analysis?
I now check every trade of any type(momentum,pullback,breakout,etc) that my scans generate against the Thompson Reuters Starmine rating and only invest in stocks with a bullish or neutral rating and discard those with bearish ratings. I just don't feel comfortable investing in a stock with a bearish rating even though the charts and technical indicators look great.
Stockcharts.com as far as I can tell offers no ability to check out the ranking of a stock based on fundamental analysis. It would seem to me that as Gatis Roze says " you want the wind at your back when you are trading- strong sector,strong industry, strong stock" that you would also want to include "strong fundamentals". Is this a deficiency in the entire Stockcharts.com methodology?
I would estimate that most of the subscribers to Stockcharts.com are involved in trading and the Stockcharts advanced scan engine is a wonderful tool. But why not make it even better by adding some sort of fundamental analysis ranking ability to it? The only reason I can see for not doing this is if the people who run Stockcharts think fundamental analysis is completely worthless and the charts tell you everything. Is that the case? Is fundamental analysis completely worthless?
I have felt more secure in my trading now that I am using the Starmine fundamental analysis rankings to my trading criteria. I am interested in what other members of the stockcharts.com community think about this subject.



Comments

  • markdmarkd ✭✭✭
    Well, I think it's a matter of comparitve advantage, not market philosophy. It's very expensive to do original fundamental analysis, and there is huge competition, so you would have to rent someone else's research and re-sell it, and increase your subscription fee to do it, without really adding to your comparitive advantage. Note the Fidelity and Thompson Reuters are multi-million/billion dollar companies.

    With respect to fundamental analysis, if you follow upgrades and downgrades on Finviz, and/or the news stream there from investing media, you will find its very hit or miss, some great calls and some howlers. They are often late, both in buying and selling. This is why passive ETFs have nearly taken over from actively managed funds.

    That said, I don't see anything wrong with validating your technical conclusions with fundamental analysis. But for an objective analysis of the method, it would be worthwhile to keep track over the long term what happens to stocks with each combination of opinions - good technical/good fundamental, good/poor, poor/good, poor/poor - and see whether anyone of them shows consistent out-performance. Intuitively, the good/good makes sense, but it may be just that you want fundamental analysis to relieve the anxiety of taking a position, and so far it has done that for you. But, it's a bull market, so that might be just coincidence.
  • @ JHuber8383
    Interesting comments.

    What's the track record or success rate of "Fidelity Stock Screener equity summary score from Thompson Reuters Starmine"?
    Do you buy when the "Bull" is first issued?
    Do you sell when "Neutral" is issued or when "Sell" is issued?
  • I have just been using it in addition to my scans which are based on technical analysis to decide whether or not to enter a trade. If a trade generated by my scans has a neutral or higher ranking
    then I will enter; if it has a bearish rating I discard the trade. I don't use it at all to exit trades. My trades are usually short term(1 to 6 wks) and I use my own exit criteria which have nothing to do with the Starmine rating.
Sign In or Register to comment.