Recently, TradeSmith wrote to you about a Netherlands-based team that examined an incredible 217 years of market data. The study looked at six factors that drive modern-day quant investing.
- Momentum (the tendency of winning stocks to keep winning)
- Trend (the tendency of strong trends to persist)
- Value (the long-term outperformance of cheaply priced stocks)
- Carry (the tendency of high-income securities to be favored)
- Seasonality (buying at a historically favorable time of year)
- BAB (‘Betting Against Beta,’ favoring low-volatility vs high)
Now, we certainly don’t expect you to analyze over 200 years of data to determine the trend of stocks today. We can, however, help you with this.
We recently partnered with LikeFolio. They want to help investors make more potentially profitable investing decisions backed by data. Sounds familiar, right?
Andy Swan and his brother Landon co-founded LikeFolio. It uses data gathered from Twitter to predict whether a stock may be heading higher or lower based on consumer trends. This data looks at how often a brand is mentioned, consumer sentiment, and purchase intent.
The data can then help predict trends on Main Street before they become news on Wall Street. For example, LikeFolio called Apple bearish long before the stock started to drop in price. This early trend could have helped you exit the trade ahead of the recent stock bottom.
We’re very excited at TradeSmith to have the opportunity to bring their research to our subscribers. We can’t stress enough how much we believe in their concepts. They are the only third-party program supplier we’ve partnered with to integrate with our software.
So, what will LikeFolio tell you about stocks?
- LikeFolio Bearish — Indicates the year-over-year purchase intent has either fallen faster than the stock price or has not grown as much as the stock price. Suggests stock price may be trading too high.
- LikeFolio Bullish — Indicates the year-over-year purchase intent has either grown faster than the stock price or has not fallen as much as the stock price. Suggests stock price may be undervalued.
- LikeFolio Neutral — Indicates the year-over-year purchase intent is in line with the stock price right now. Suggests stock is trading at or near where it should be.
Note that some stocks might not have a LikeFolio status at all. This just means that there isn’t enough data yet to draw a solid conclusion. But don’t worry — LikeFolio adds to its list of supported stocks all the time.
The plug-in also tells you the Purchase Intent for stocks. This number is determined when someone indicates (on Twitter) that they intend to buy or have bought a product. This is the 90-day moving average for consumer sentiment.
How Can LikeFolio Help Your Research?
Finding new stocks to invest in can be difficult. You need to research the company — check their performance, analyze data, and much more. It can easily get overwhelming, especially if you have a long list of recommendations from newsletters you follow.
Our latest integration with LikeFolio can help you with the research process. In addition to the current Stock State Indicator (SSI) and Volatility Quotient (VQ) information you see, the LikeFolio plug-in will tell you if the position is bullish or bearish. Plus, you’ll be able to see the Purchase Intent of consumers.
Where Can You Find this Information?
In the screenshot above, we can see that Viad (VVI) is Bearish according to LikeFolio. As you do your research, you might notice for some stocks that the SSI reads green whereas LikeFolio says the stock is bearish. This is due to the difference in our analysis. Our research is based on technical analysis, whereas their research is based on brand mention volume, sentiment, and purchase intent.
You can find the Purchase Intent on the position’s chart. In Ideas by TradeSmith, this number will automatically appear for you under the chart. In TradeStops, you will need to turn this on in the Chart Settings by checking the “LikeFolio Purchase Intent” box to the left of the chart.
You can use this number to compare the historical performance of a position. The higher the number, the stronger the buying intent of consumers.
Many investments currently sit in the SSI Red Zone. Given the market’s recent run up, some of our users have wondered why more positions haven’t turned Green yet. On March 20, Tom Meyer and Marina Stroud will review the SSI and the requirements for a position to trigger a new Entry Signal. Join them March 20 at 1 p.m. Eastern.
If you’ll be attending the Investment U conference or if you live in the St. Petersburg, Fla. area, mark your calendar for March 31. Our training team is sponsoring a free off-site and in-person bootcamp for our TradeSmith subscribers. They’ll answer your questions and show you how to get the most out of your TradeSmith products.
This is open to anyone with an active TradeSmith subscription, but there is limited seating available, so make sure to reserve your spot by calling our Customer Success team. Their number is 866-385-2076. They’re available Monday through Friday from 9 a.m. to 5 p.m.
Remember, it’s always our goal to make your TradeSmith experience even better. And, LikeFolio can really help you get ahead of the curve. If you have any questions, please let us know. Our email is [email protected].
Please note, however, our Customer Success agents cannot assist you with technical analysis or calculations of LikeFolio results.
Until next time,
TradeSmith Customer Success Team