The Second Opinion report is a technical research report that weighs the supply and demand characteristics of a stock or ETF. The report generates a daily Long, Neutral, or Avoid opinion on over 3500 stocks and ETFs. We provide a clear one or two sentence summary of the stock's technical condition in our Recommendation and a detailed explanation of what it all means in our easily readable Comment followed up with all the numbers so you can do your own analysis.
Technical analysis is a form of analysis employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysts, who attempt to evaluate a security's intrinsic value, technical analysts focus on patterns of price movements, trading signals, and various other analytical charting tools to evaluate a security's strength or weakness.
The purpose of Second Opinion is to give you access to meaningful information that assists you in making difficult Buy/Hold/Sell decisions. Second Opinion is a quantitative model designed to help you manage market risk. Whereas analyst reports are intended to manage fundamental risk by supplying information on fundamentals such as sales, earnings, and industry outlooks, quantitative or technical analysis measures market risk - how investors and traders are actually trading.
Second Opinion will enable you to take a position in stocks in the early stages of up moves and get out of stocks prior to a plunge.
Let's first take a look at the most important parts of the Second Opinion report. Afterwards, we'll look at what to prioritize when making your own Buy-Hold-Sell decisions, including the four warning signs that Second Opinion flashes to signify a trend reversal.
The Opinion presents key information. You will find the current opinion (Long, Neutral or Avoid) as well as the date and price when the opinion was originally formed. To further assist you, Neutral opinions provide you with direction and are listed as either Neutral from Long (a downgrade) or Neutral from Avoid (an upgrade). Finally, new additions to the Second Opinion universe carry a Long, Neutral or Avoid opinion but will not show a retroactive price and date. Price and date will be provided once the stock has its initial opinion change.
The Recommendation is designed to give you actionable guidance that day. Unlike other research, every Second Opinion has a date and price for the current opinion. Recommendation is the validity of that opinion today. For example, have you ever bought a stock from a firm's "Best Buy" list? Did you really know what the analyst thought about the stock the day you bought it? Was he still comfortable with the recommendation or was he concerned about the stock? If the model still likes the stock, the recommendation will be "Buy". If the model sees deterioration in the trading patterns, it may say "Hold" or "Consider closing the position".
The Comment translates the technical picture of the stock into action-based language, highlighting the technical condition of the stock. Comment is one of the most popular features of Second Opinion, and is best utilized in conjunction with the Recommendation.
There are two key elements to Second Opinion. The first is the OPINION - our Long/Neutral/Avoid opinion - which we have already covered. The second is the SCORE. Together they produce the Recommendation which is the best way to manage your stock investments.
The Score reduces the level of market risk to a single number for interpretation purposes. Scores range from 0 to -4 for Longs, attempting to show levels of technical deterioration and guiding you to an exit point. Scores range form 0 to +4 for Avoids, attempting to show levels of improvement and guiding you to an entry point. The table below summarizes the Score System.
|Interpretation / Market Risk
|Stock is a buy. Market risk is low.
|Stock is a buy with minor deterioration. Market risk is low.
|Stock now experiencing technical deterioration. Market risk is moderate but increasing.
|Warning sign if you own the stock. Significant technical deterioration. A good point to begin evaluating your individual Buy-Hold-Sell strategies. Market risk is significantly increasing.
|Warning sign if you own the stock. Extreme technical deterioration. Market risk is high.
Our relationships with institutions and our experience over the years have provided some reliable, tested criteria in making Buy-Hold-Sell decisions with a high degree of confidence.
A "Long" that flashes one or more of the following four warning signs is in trouble. At this point, you should be monitoring the stock closely and considering defensive strategies:
These warning signs may appear in any sequence, but all must occur before an opinion gets downgraded to an "Avoid".