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

JHuber8383

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.

markd

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.

petero1298

@ 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?

JHuber8383

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.

DonWatza

In my process for choosing entry points I use StockCharts and Starmine as @JHuber8383 suggests. It has been more successful on hitting more often, 60% or better within a few days of the initial selection. I'd be interested in other more updated comments about this topic.
David Keller suggested some fundamentals are going to be included and in the charts there is now P/E, and a couple other items.

markd

A list in 10 per page view includes a green "Actions" button in the upper right of each chart. Under "More Resources" there is a "Symbol Summary" option. That displays a selection of fundamental data and a company description. There's also a window for Analysts' Ratings that says "coming soon".

lmkwin

In the Symbol Summary section they are listing some other information and are teasing "Coming Soon" on other info. I have no idea whether it will be scannable or not.

I don't use fundamental data for much. It's a story. Sometimes fact. Sometimes fiction. Sometimes a bit of both. Technical data is fact.

DonWatza

This morning actually, I poked around some more and found "coming soon" on opinions. So, hopefully these elements can be scannable. Is scannable a word? ha

lmkwin

In my vocabulary, scannable is a word. Of course, I used to work at a place that set a designation for shipping on some items as bubble envelopable. But yes, scannable is actually a word. Envelopable is part of a programmer's suggestion for classification.

markd

I'm skeptical that analyst rankings will be scannable. It might happen if SC makes a deal with an outfit that already has a ranking system producing data that can be shared (i.e. updated to the scan engine) electronically (like maybe S&P), but I don't see a relatively small outfit like SC taking on the burden of manually maintaining the rankings of thousands of stocks which would be constantly changing. I would guess the analyst section in the symbol summary might be links to sites like Zacks or Seeking Alpha or the Street or some such. But we'll see.

lmkwin

It would be interesting if they added more, and filled in the place markers of the fundamentals section to the scan engine database.



I say interesting. I classify data into two categories. Interesting and Useful. I'd need to do much more study as to whether the fundamental data is useful to base decisions on. I currently do not use it with the exception of yield info.

Earnings date info might be useful as well.



Growth rates would be more information to study. Coming Soon........

CharlesK

Marc Chaikin has a plugin, available thru stockcharts.com, that includes fundamentals.

azb

Bring a SAW. You may need an ARM and a LEG to buy a plug-in.

candidcactus

My 2 cents worth.
To my mind fundamental analysis can be useful for longer term investments. I don't see how it could be useful to a trader. I don't see how it could provide timely/useful entry or exit signals. You can also scan for *investment stocks* with StockCharts. Looking at the attached Microsoft Chart, you can see that you could buy almost anytime, hold for a decade or so, and make a lot of money. This kind of stock can be scanned for. If that's what you're looking for, this stock would be hard to beat. There are other stocks much like this. Stocks that appreciate smoothly and steadily.
But also note that with technical analysis optimal entry levels (for instance) can be discovered with a very high degree of success. The lower EMA envelope (price rising above it from below, or bouncing off of it (blue verticals) is approximately 100% successful for entering in from a low (for MSFT). The brown verticals are also very accurate for some stocks. There are numerous other ways of achieving this, but certainly NOT with fundamental analysis.
I don't use fundamental analysis, have no robust acquaintance with it, and assume it can be useful in ways I don't understand. 45 or so years ago, that's pretty much all that was available.



Edit Gord
"Stocks that appreciate steadily" .changed to. "Stocks that appreciate smoothly and steadily" as per request by Candidcactus

candidcactus

What is the - Vanilla Comments Edit permission -. I wanted to change
Stocks that appreciate steadily .to. Stocks that appreciate smoothly and steadily

markd

I believe as long as you are signed in, you can go back and edit your own comments. Run your cursor over near the square in the upper right corner of the comment, click on the gear icon that shows up there.

candidcactus

I already made some edits that way. You have an hour to do them all. I realize that that is very reasonable ... but ... About 1-2 minutes after that hour, when I tried to make my final edit, I was told on the right of the message that I needed

"Vanilla Comments Edit permission" to do that. I figured if anyone knew about that it would be you.

markd

OK. I didn't know about the 1 hour limit.

In general (I don't know anything specific about VF), permissions to do different things within an application are assigned to "roles" by an administrator, usually only one of whom (maybe two) can potentially do anything. In a business application, roles would be assigned according to job duties. So, some people can only read things not related to their responsibilities, but can update things they are responsible for. So, you probably have a "member" role that allows you to read others posts, add posts yourself, and, apparently, edit them for an hour.

gord

Candidcactus,

I have updated your post with the requested edit, "Stocks that appreciate steadily .to. Stocks that appreciate smoothly and steadily"

Note the 1 hour limit on post edits is built into Vanilla Forums as is the case with most standard forums. This prevents the forum from becoming disjointed, particularly when a user changes the original post after reply comments have been posted.