Frequently Asked Questions

Good question. This is because the Power Gauge describes likely relative performance. It scores all the stocks based on how likely they are to outperform other stocks in the rating universe. The top 7th of the list are called “Very Bullish”. The bottom 7th are called “Very Bearish”. There’s some proprietary ‘bucketing’ in between. Whether the “underperformers” go up or down is a function of the market.

Another good question. This is because of the cap-weighting of the benchmark indices. A small number of very large cap stocks (like Apple, Walmart, and Exxon Mobil) largely determine the fate of the cap-weighted indices. If they did very well or poorly in a particular period, the index benchmark will be pushed to one side.

The technical overlay ‘clips’ Bullish stocks which are breaking down, and Bearish stocks which are breaking out to the upside. The effect on results is generally: Some good Bullish stocks which are going to outperform would not be in the Bullish buckets. We would lose a little performance on these. However, some of these would be in for very steep drops. Vice versa for Bearish stocks. This would affect “drawdown” if we were tracking a model portfolio. The easiest way to describe this is: the overlay lowers the risk of the model. It cuts a little upside and a lot of potential downside.

No. These results show a standard “buy all” evaluation method. Many different strategies can be used to turn the Rating into a model portfolio. These include market timing considerations, money management and exit rules, and other stock selection criteria (such as short-term technicals). We are comfortable the model is effective across a wide variety of portfolio creation strategies.

It could. Remember, there are a lot of stocks to pick from. It does mean that on average, the stock is more likely to outperform the rest of the stocks in the Russell 3000 index 1, 3, and 6 months from now. But the RATING is not a MARKET indicator. It’s not saying whether the market is likely to go up or down. And the Rating itself is not a TIMING indicator. It doesn’t tell you what might happen to the stock over the short-term, like the next few days or weeks, for example. A stock may be very short-term overbought, and at risk for pulling back over the next few days or weeks, but still likely to outperform over 1-6 months. Chaikin Analytics provides other Indicators and Signals to determine short-term TIMING risk. We also suggest you confirm with the stock’s technicals and Industry Group strength.

Yes. All testing is done with end-of-week Power Gauge Ratings. Over the course of many years, daily changes tend to wash out. However our products do update and display Power Gauge Ratings on a daily basis, and these can trigger Signals. However on a historical chart, you will see the end-of-week value for all weeks, including the current one.