ANNOUNCING SCTRs, AN IMPORTANT NEW TOOL FOR CHART WATCHERS - Stock ranking systems are nothing new. Investors Business Daily has had their well-known RS Rank system in place for years. Today, we are announcing our own stock ranking system called the StockCharts Technical Rank (SCTR) - "Scooters" for short.
Like all ranking systems, SCTRs take a predefined universe of stocks (initially the S&P 500) and calculate a score for each stock. The stocks are then sorted based on that score and assigned a rank - a number between 0 an 100 based on their position in the sorted list.
SCTR scores are based exclusively on straightforward technical conditions championed by John Murphy in his books and presentations. They were inspired by John's "10 Laws of Technical Trading" essay. We'll have a ChartSchool article with the exact formula available in a week or so but essentially we are looking at 6-month performance, 20-day performance, distance from the 200-day moving average, distance from the 50-day moving average, the slope of the MACD histogram, and the RSI's value. Each one of those factors is weighted based on John's opinion of its importance and then added together to achieve the final score for each stock.
At this point we are only creating SCTRs for just the S&P 500 stocks and presenting them in table format on this page. We consider this to be a "Beta" test of sorts and would like feedback from everyone over the next couple of weeks about the rankings. Do the stocks with a 90+ SCTR rank have "good looking" charts? Do the stocks with low SCTR ranks have weak looking charts? Are the stocks with large SCTR changes from the previous day deserving of those large changes?
Down the road, we intend to add SCTRs to a wide variety of things throughout the website including:
- Allowing members to see the SCTR tables update in real time during market hours
- Allowing members to use SCTRs in their custom scans
- Creating SCTR rankings for additional stock universes including Canadians stocks, ETFs, Mutual Funds, Small Cap stocks and Mid Cap stocks
- Allowing members to add the SCTR line as an indicator on their charts
- Allowing members to use a MarketCarpet based on SCTR values
We hope you find SCTRs useful. Please take a look at them and send us feedback about how you might use them once they are fully deployed.
