We have a unique approach and feature-rich set of supporting tools. This
uniqueness and richness can make it difficult for new subscribers to
get the most out of our site during a short trial. Please take the time
to read this document to understand our approach and then read the
additional documents we provide in our Learning Center.
Core Services - Watchlists of long or short position candidates
At the heart of our services are watchlists of stocks meeting certain chart pattern criteria. The watchlists are in two categories: long position candidates and short position candidates. Long position candidates are stocks that our algorithms determine are in chart patterns that are considered bullish, meaning that they have the potential to increase in price in the near term. Short position candidates are stocks that our algorithms determine to be in chart patterns that are bearish, meaning that they have the potential to decline in price in the near term.
For each stock on the watchlists we provide:
- pivot point - the price at which the stock is either about to breakout or breakdown
- technical data updated daily
- fundamental data updated weekly
- industry rankings and rank within industry
- a technical and fundamental analysis of the stock using a methodology we call CANTATA (Current earnings + Annual
earnings + New highs + Technical Analysis + Timing Assistance)
- annotated stock chart showing critical technical criteria
Additional Services - breakout or breakdown Alerts
Once a stock has appeared on our watchlist we follow its price movement in real time. If it reaches its pivot price we:
- send an email alert
- add it to our list of 'Alerts Issued Today'
- place it on our 'Alert Monitor' where the price and volume is displayed in real time through out the day
Additional Services - Analytical Tools and Reports
- Daily Breakout and Breakdown Reports
- Industry Browser
- Trend Reversal Signals
- Cup-with-Handle Backtest
- Volatility Squeeze Backtest
- Trailing Stop Calculator
How We Optimize the Search for our Watchlist Stocks
The traditional approach has been to 'eyeball' possibly hundreds of chart patterns for those that provide a valid entry point or 'pivot'. We turn that approach on its head by using computer algorithms to find charts that
give a valid entry point and then rating the resulting stocks by technical
and fundamental criteria. We also provide an estimate of the expected return
that can be obtained after a breakout from our cup-with-handle watchlist
based on an 18-month history of breakouts.
How We Are Different from “Stock Picking” Services
We provide a unique and timely set of tools to help you select potential breakouts that fit your particular trading style and risk tolerance. We do not
tell you what you should buy or sell, nor do we perform due diligence on
possible candidates for you. While this is what is typically done with a
stock picking service, this requires that you have the same personal preferences
and risk tolerance as does the service. This also takes the decision making
process out of your hands, something we believe is critical to an investor’s
long term success in the market.
How we Organize our Information
We organize our information in
a 'life-cycle' style. That is, that there are four stages in each investment
Mining for investment candidates - searching
for stocks that you will consider for detailed evaluation
- Evaluation - detailed analysis of candidate
stocks against your personal investment criteria. Due diligence in
other words and refinement of the watchlist.
- Take action - purchase a stock when a valid
entry point occurs
- Monitor - follow progress of breakouts and
changing market conditions
Mining for Candidates
Each day, after the market close, we scan all common stocks on the NYSE, AMEX and NASDAQ exchanges and our algorithms select stocks into 6 long position categories and 2 short position categories.
- Long Position Candidates
- Cup with Handle (cup and handle)
- Double Bottom
- High Tight Flag
- Head and Shoulders Bottom
- Volatility Squeeze
- New 52 week highs
- Short Position Watchlists
- Head and Shoulders Top
- 50 DMA Breakdown
The methodology used to select stocks into each of these categories is described in the 'Methodology' tab for wach watchlist.
We have a comprehensive set of evaluation tools including our proprietary
CANTATA Evaluator, specialized Stock Charts, Industry Components listings,
Industry Charts and Industry Analysis tools. More information on each of
these tools is available from the home page.
Our CANTATA Evaluator (CESM)
measures each stock against a preferred set of characteristics
for a CANTATA candidate. The CE tool allows you to measure
any potential candidate against the CANTATA yardstick using
a “preponderance of evidence” approach . This is
described more fully in our help documents. To review these,
go to the home page and click the “CANTATA Evaluator (CESM)” button,
then click on the “Info” buttons that accompany the
We deliberately do not rank stocks against
each other as does the IBD’s EPS and SMR metrics, as these
values do not always accurately reflect whether a stock has all
or some of the desired fundamental attributes of a CANTATA candidate.
Our CE Detail provides a transparent view of not only the stock’s
underlying fundamental details but also the CE points attributed
to each fundamental characteristic.
Our Industry Analysis tools provide an innovative
and succinct method of viewing industry performance. We place each stock
into one of our 190 Industries and then both Score and Rank each industry.
Our approach is significantly different than that used by the IBD, which
uses the average price of each industry group as the basis of their ranking
system. Our proprietary methodology instead views the overall technical
health of each stock within an industry, and then utilizes these to assign
an Industry Score. Plotted over time, this more easily demonstrates the
technical action of the Industry vs. the Market. We use these Industry
Scores as the basis of our Ranking system. To review information on our
Industry Tools, go to the home page and click the “Industry” button,
then click on the “Info” buttons that accompany the tools.
We offer a unique tool previously unavailable to the CANTATA investor--alerts
which are automatically emailed directly to you when a stock on our daily
watchlist attempts a breakout. Because each user will choose to pursue
different stocks, we offer the option to receive alerts only on those stocks
that meet your personal preferences or on all stocks attempting a breakout
during market hours. This is achieved through setting filters for each
watchlist. There is more information on how to set filters on the help
document associated with each watchlist.
The Breakout Report is updated daily with the
progress of stocks that broke out in the last thirteen weeks. This report
allows you to find stocks that have broken out but are within a 5% range
of their breakout price and could be considered for purchase. The Breakout
Report also shows the progress of each stock since breakout.
The Market Analysis shows
clearly the current state of the markets as measured by the DJI,
Nasdaq Composite and S&P 500 indexes. Our 'equivolume' charts
show the strength and direction of the indexes in a unique graphical
format that clearly shows movement, volume and Accumulation and
Distribution days on a single chart. Since 75% of all stock movements
are explained by the overall market direction, our Market Analysis
page is an indispensable tool in making investment decisions.
Using Our Site
While each investor will have their own unique way of using the tools at our
site, we have provided a general set of guidelines for you in our “How
to Use Our Site” tutorial.