The secondary indicators section gives you additional information about the security and its current position on its Point & Figure chart. Several of the data points shown in this section are mean reversion measures designed to help you determine if now is a good time to act on this security.
Beta
A measure of the a security's volatility relative to the overall market. A security with a beta greater than 1 is considered more volatile than the market, a security with a beta lower than 1 is considered to be less volatile than the market, and a security with a beta equal to 1 is considered to have a similar amount of risk to the market.
Beta can be calculated as (security's standard deviation/market standard deviation) x security's correlation to the market.
RRisk
RRisk stands for "relative risk." It is similar to beta, but it removes the security's correlation to the market from its calculation. It is instead calculated simply as (security's standard deviation/market standard deviation).
Similar to beta, it is used to judge the security's volatility relative to the market. Just as with beta, a security with an rRisk greater than 1 is considered more volatile than the market, a security with an rRisk lower than 1 is considered to be less volatile than the market, and a security with an rRisk equal to 1 is considered to have a similar amount of risk to the market.
Yield
The annualized dividend yield received by owning this stock.
For high yield stocks, it may be most appropriate to use the stock's total return version (add ".TR" to the end of the ticker) to evaluate it's strength since the price return version of the ticker will not factor its yield into the stock's return.
Weekly OBOS
Weekly OBOS% (Overbought/Oversold), which is also sometimes referred to as Weekly Distribution, measures a security's current position within a 10-week trading band. It is a mean-reversion measure and is primarily used for timing when to enter or exit a position. Over time you would expect securities to revert towards their moving average (0%).
Positive numbers denote securities currently trading above their moving averages (overbought territory). Negative numbers denote securities currently trading below their moving average (oversold territory).
The Top, Mid, and Bot labels shown on the righthand side of the chart correspond to the Weekly OBOS% figure.
Top- 100% overbought
Mid- 10-week (50-day) moving average (0%)
Bottom- 100% oversold
Securities that begin to approach or surpass 100%/-100% are considered to be highly overbought/oversold and are expected to revert towards the moving average.
For more on the OBOS% and its effectiveness, you can download our OBOS whitepaper.
Clicking on the OBOS value will show the security's OBOS history, the current values of the top, midpoint, and bottom of the trading band, and the option to switch to Daily OBOS for a shorter-term view of this measure.
Momentum
The (Daily/Weekly/Monthly) Momentum measure looks at the relationship between a shorter-term moving average and a longer-term moving average.
If the shorter-term moving average is higher than the longer-term moving average, the stock is exhibiting positive momentum. This data point is a mean-reversion measure and is primarily used for timing when to get in or out of a position.
Daily momentum is used for shorter holding periods, weekly momentum is used for intermediate-term holding periods, and monthly momentum is used for longer-term holding periods.
On average, a stock tends to exhibit positive or negative momentum for 6-8 days/weeks/months before reverting towards the mean.
Clicking on one of the momentum values will reveal the security's momentum history and a visualization of the security's momentum, which may help you identify how long the security tends to exhibit positive or negative momentum before reversing. The "cross" column shown below is the price the security needs to reach to flip from positive to negative momentum or vice versa.
Pattern
The pattern shown in this section refers to the most recent chart pattern completed by this security and when it was completed.
As a security's chart alternates columns, the tops and bottoms of these columns will form near term levels of support and resistance. Breakouts through these levels of support/resistance form the patterns that inform our decision making. These patterns create clear and actionable signals that allow us to objectively and unemotionally react to the market as it changes.
The two most basic and most common patterns are the double top and double bottom.
A double top happens when a column of Xs reaches a point above the previous column of Xs. This represents a breakout through a near-term level of resistance and shows that demand is currently driving the security’s price to higher highs. A double top is considered a buy signal.
Conversely, a double bottom happens when a column of Os reaches a point below the previous column of Os. This represents a breakout through a near term level of support and shows that support is currently driving the security’s price to lower lows. A double bottom is considered a sell signal.
Ideally, we want to invest in securities currently on a bullish pattern since this means there is currently more demand pushing the security's price higher.
It is important to note that although we refer to patterns as buy and sell signals, it is best not to think of them as primary indicators of what to buy and but rather as inflection points that may help with when to buy or sell a security. You can have a weak security show enough short term improvement to register a buy signal that we may still not considering buying based on its longer term weakness. Instead, we rely on tech attributes and fund scores to determine what to buy and sell with pattern used as one of the data points to help us with when to buy or sell.