Core Concepts

Here are a few of the core concepts that are important to understand in order to make the most of our weekly analysis.

Relative Strength – When we talk about relative strength, we are referencing the performance of a stock when compared to the performance of the general market, specifically the S&P 500. Our analyses are always focused on stocks with high relative strength. You may also see us refer to this concept as “price performance percentile rank”.

Liquidity – We also focus on liquidity for many of our analyses. Frequently we are using a stock’s market capitalization number as a proxy for liquidity, which refers to an investor’s ability to quickly buy or sell a stock without effecting the price. In particular, we strive to put ourself in the perspective of an institutional investor, because it is large institutional buying that creates big, sustained price moves in stocks, and institutional buyers require liquidity! We love putting the wind at our back in the markets, but neither do we mind riding on the backs of elephants.

Technicals – This refers to data surrounding the price movement of the stock.

Fundamentals – This refers to data surrounding the business performance of the company.