StockCharts Technical Rank (SCTR)

Differences

This shows you the differences between two versions of the page.

Link to this comparison view

Both sides previous revision Previous revision
Next revision
Previous revision
technical_indicators:sctr [2019/11/01 21:43]
betseyp [SCTR Universes]
technical_indicators:sctr [2023/06/30 21:48] (current)
jayanthi [Frequently Asked Questions]
Line 1: Line 1:
 ====== StockCharts Technical Rank (SCTR) ====== ====== StockCharts Technical Rank (SCTR) ======
  
-===== Introduction ​=====+===== What is StockCharts Technical Rank? =====
  
 The StockCharts Technical Rank (SCTR) is a numerical score that ranks a stock within a group of stocks. The methodology for these rankings comes from the wisdom of John Murphy, author of many books on technical analysis and contributor to the Market Message at StockCharts.com. The StockCharts Technical Rank (SCTR) is a numerical score that ranks a stock within a group of stocks. The methodology for these rankings comes from the wisdom of John Murphy, author of many books on technical analysis and contributor to the Market Message at StockCharts.com.
Line 11: Line 11:
 Note that leveraged and inverse ETFs are excluded from the SCTR rankings for the ETF universe. Above-average volatility and inverse movements skew the results. The VIX ETF (VXX) is also excluded because it moves inverse to the S&P 500. Note that leveraged and inverse ETFs are excluded from the SCTR rankings for the ETF universe. Above-average volatility and inverse movements skew the results. The VIX ETF (VXX) is also excluded because it moves inverse to the S&P 500.
  
-===== Calculation ​=====+===== How is the SCTR Calculated? ​=====
  
 It takes two steps to calculate the StockCharts Technical Rank (SCTR). First, each stock is "​scored"​ based on six different technical indicators. These six indicators can be subdivided into three groups: long-term, medium-term and short-term. The box below details these indicators, the relevant timeframe and the weightings. It takes two steps to calculate the StockCharts Technical Rank (SCTR). First, each stock is "​scored"​ based on six different technical indicators. These six indicators can be subdivided into three groups: long-term, medium-term and short-term. The box below details these indicators, the relevant timeframe and the weightings.
Line 47: Line 47:
 StockCharts Technical Rank goes into much more detail. First, the rankings extend from 0.00 to 99.99, with 0 being the absolute weakest and 99.99 being the absolute strongest. No stock will score a perfect 100. Second, StockCharts.com creates "​buckets"​ (akin to percentiles) to sort the stocks within a group. Using an example with a universe of 500 stocks, ten equal buckets would be created and each bucket would have 50 stocks (50 x 10 = 500). The 50 stocks with the lowest indicator scores go into the bottom bucket and have SCTRs ranging from 0 to 10. The 50 stocks with the highest indicator scores go into the top bucket and have SCTRs ranging from 90 to 99.99. Each bucket will then be filled accordingly and further sorted within the bucket. The end result is 500 stocks ranked from 0 to 99.99 and spread relatively evenly across the ranking pool. StockCharts Technical Rank goes into much more detail. First, the rankings extend from 0.00 to 99.99, with 0 being the absolute weakest and 99.99 being the absolute strongest. No stock will score a perfect 100. Second, StockCharts.com creates "​buckets"​ (akin to percentiles) to sort the stocks within a group. Using an example with a universe of 500 stocks, ten equal buckets would be created and each bucket would have 50 stocks (50 x 10 = 500). The 50 stocks with the lowest indicator scores go into the bottom bucket and have SCTRs ranging from 0 to 10. The 50 stocks with the highest indicator scores go into the top bucket and have SCTRs ranging from 90 to 99.99. Each bucket will then be filled accordingly and further sorted within the bucket. The end result is 500 stocks ranked from 0 to 99.99 and spread relatively evenly across the ranking pool.
  
-===== Interpretation ​=====+===== How Can I Interpret the SCTR? =====
  
 The indicator score is unique and powerful because it accounts for several timeframes, rather than being tethered to a specific one. A stock must score well with all indicators and all timeframes to earn a top indicator score and technical rank. The indicator score puts more weight on the two long-term indicators, which account for 60% of the total score. This makes sense because the long-term trend is the strongest force. The weightings decline as scoring moves to the short-term indicators. The medium-term indicators account for 30% and the short-term indicators account for 10%. Together, the long-term and medium-term indicators account for 90% of the total score. The indicator score is unique and powerful because it accounts for several timeframes, rather than being tethered to a specific one. A stock must score well with all indicators and all timeframes to earn a top indicator score and technical rank. The indicator score puts more weight on the two long-term indicators, which account for 60% of the total score. This makes sense because the long-term trend is the strongest force. The weightings decline as scoring moves to the short-term indicators. The medium-term indicators account for 30% and the short-term indicators account for 10%. Together, the long-term and medium-term indicators account for 90% of the total score.
Line 57: Line 57:
 SCTR tables can easily be sorted to separate the strongest stocks from the weakest. In any given SCTR universe, the top 10% will rank between 90 and 100, while the bottom 10% will rank between 0 and 10. A stock scoring 50 would be average, showing neither relative strength nor relative weakness. In general, scores between 40 and 60 are considered average. Signs of technical weakness start to appear as scores move below 40. Signs of technical strength emerge when scores move above 60. SCTR tables can easily be sorted to separate the strongest stocks from the weakest. In any given SCTR universe, the top 10% will rank between 90 and 100, while the bottom 10% will rank between 0 and 10. A stock scoring 50 would be average, showing neither relative strength nor relative weakness. In general, scores between 40 and 60 are considered average. Signs of technical weakness start to appear as scores move below 40. Signs of technical strength emerge when scores move above 60.
  
-===== SCTR Universes =====+===== What Are SCTR Universes=====
  
 In order for a stock to have a SCTR value, it must first belong to a "​Universe."​ Universes are large groups of stocks established by StockCharts.com for the purpose of relative strength ranking. A stock can only belong to one SCTR Universe at a time. Currently, we use country and/or market capitalization to determine which universe a stock belongs to. In order for a stock to have a SCTR value, it must first belong to a "​Universe."​ Universes are large groups of stocks established by StockCharts.com for the purpose of relative strength ranking. A stock can only belong to one SCTR Universe at a time. Currently, we use country and/or market capitalization to determine which universe a stock belongs to.
Line 63: Line 63:
 Here is a list of the current SCTR universes that we support: Here is a list of the current SCTR universes that we support:
  
-  * **Large-Cap** ​ - US stocks that are components of the S&P 500 Index (or were in the past) +  * **Large-Cap** ​ - US stocks that are components of the S&P 500 Index, plus selected stocks with a market cap over $10 billion 
-  * **Small-Cap** ​ - US stocks that are components of the Russell 2000 Index +  * **Small-Cap** ​ - US stocks that are components of the Russell 2000 Index, plus selected stocks with a market cap under $2 billion 
-  * **Mid-Cap** ​ - US stocks that have a significant market cap but do not fall into either the Large-Cap or Small-Cap universes+  * **Mid-Cap** ​ - US stocks that have a significant market cap ($2-10 billion) ​but do not fall into either the Large-Cap or Small-Cap universes
   * **ETF** ​ - Non-leveraged US ETFs   * **ETF** ​ - Non-leveraged US ETFs
-  * **Industries** - US industries+  * **Industries** - US industries, represented by Dow Jones US Industry Indices
   * **Toronto** ​ - Canadian stocks that trade on the Toronto Stock Exchange and have significant market cap   * **Toronto** ​ - Canadian stocks that trade on the Toronto Stock Exchange and have significant market cap
   * **London** ​ - Stocks that trade on the London Stock Exchange and have significant market cap   * **London** ​ - Stocks that trade on the London Stock Exchange and have significant market cap
Line 75: Line 75:
 The SCTR Universes are "​re-balanced"​ each year around June 1st. The SCTR Universes are "​re-balanced"​ each year around June 1st.
  
-===== Long-Term Indicators =====+===== SCTR Long-Term Indicators =====
  
 There are two percentage-based long-term indicators. First, the indicator score accounts for how far a stock is from its [[:​technical_indicators:​moving_averages|200-day moving average]]. A stock is in a long-term uptrend when it is above the 200-day moving average and in a long-term downtrend when it is below. The distance from the 200-day moving average line determines the trend'​s strength. A strong uptrend is present when price is well above the 200-day. Conversely, a strong downtrend is present when price is well below the 200-day. There are two percentage-based long-term indicators. First, the indicator score accounts for how far a stock is from its [[:​technical_indicators:​moving_averages|200-day moving average]]. A stock is in a long-term uptrend when it is above the 200-day moving average and in a long-term downtrend when it is below. The distance from the 200-day moving average line determines the trend'​s strength. A strong uptrend is present when price is well above the 200-day. Conversely, a strong downtrend is present when price is well below the 200-day.
Line 89: Line 89:
 {{:​technical_indicators:​sctr:​sctr-04-whr-lt.png?​nolink&​}} {{:​technical_indicators:​sctr:​sctr-04-whr-lt.png?​nolink&​}}
  
-===== Medium-Term Indicators =====+===== SCTR Medium-Term Indicators =====
  
-The next two indicators cover the medium-term picture. A 50-day moving average covers around 2 1/2 months of trading. A stock is trending higher when above the 50-day moving average and trending lower when below the 50-day. This positive effect is compounded when a stock is trading ​above both the 200-day //and// 50-day averages. The converse is true when a stock is trading below both moving averages.+The next two indicators cover the medium-term picture. A 50-day moving average covers around 2 1/2 months of trading. A stock is trending higher when above the 50-day moving average and trending lower when below the 50-day. This positive effect is compounded when a stock trades ​above the 200-day //and// 50-day averages. The converse is true when a stock is trading below both moving averages.
  
 The 20-day [[:​technical_indicators:​rate_of_change_roc_and_momentum|Rate-of-Change]] measures the percentage price change over a 20-day period, which is about a month. Again, stocks with big positive price changes over a 20-day period show above-average strength that will be reflected in the technical rank. A big decline over a 20-day period would negatively affect the technical rank. The 20-day [[:​technical_indicators:​rate_of_change_roc_and_momentum|Rate-of-Change]] measures the percentage price change over a 20-day period, which is about a month. Again, stocks with big positive price changes over a 20-day period show above-average strength that will be reflected in the technical rank. A big decline over a 20-day period would negatively affect the technical rank.
Line 103: Line 103:
 {{:​technical_indicators:​sctr:​sctr-06-whr-mt.png?​nolink&​}} {{:​technical_indicators:​sctr:​sctr-06-whr-mt.png?​nolink&​}}
  
-===== Short-Term Indicators =====+===== SCTR Short-Term Indicators =====
  
 The two short-term indicators account for 10% of the indicator score. First, [[:​technical_indicators:​relative_strength_index_rsi|14-day RSI]] is used to gauge short-term momentum. Developed by Welles Wilder, this classic momentum oscillator fluctuates between 0 and 100. High levels (above 60) reflect bullish momentum while low levels (below 40) indicate bearish momentum. The two short-term indicators account for 10% of the indicator score. First, [[:​technical_indicators:​relative_strength_index_rsi|14-day RSI]] is used to gauge short-term momentum. Developed by Welles Wilder, this classic momentum oscillator fluctuates between 0 and 100. High levels (above 60) reflect bullish momentum while low levels (below 40) indicate bearish momentum.
Line 117: Line 117:
 {{:​technical_indicators:​sctr:​sctr-08-whr-st.png?​nolink&​}} {{:​technical_indicators:​sctr:​sctr-08-whr-st.png?​nolink&​}}
  
-===== Using SCTR =====+===== Navigating and Customizing ​SCTR's Functionalities ​=====
  
 The StockCharts Technical Rank feature can be accessed from the [[https://​stockcharts.com/​freecharts/​sctr.html|SCTR Reports page]]. Once on the page, users can choose their stock universe. Chartists can also choose between end-of-day and intraday. End-of-day is based on the most recent daily close, while intraday is based on price levels at that particular point in time. Indicators, such as the 14-day RSI and the 200-day Moving Average, are based on those same price levels. The StockCharts Technical Rank feature can be accessed from the [[https://​stockcharts.com/​freecharts/​sctr.html|SCTR Reports page]]. Once on the page, users can choose their stock universe. Chartists can also choose between end-of-day and intraday. End-of-day is based on the most recent daily close, while intraday is based on price levels at that particular point in time. Indicators, such as the 14-day RSI and the 200-day Moving Average, are based on those same price levels.
Line 125: Line 125:
 {{:​technical_indicators:​sctr:​sctr-09-sctrpage.png?​nolink&​}} {{:​technical_indicators:​sctr:​sctr-09-sctrpage.png?​nolink&​}}
  
-===== Conclusion ​=====+===== The Bottom Line =====
  
 The StockCharts Technical Rank (SCTR) separates the wheat from the chaff. Relative strength is an important part of a successful trading or investing strategy. Based on the wisdom of John Murphy, SCTR allows chartists to compare the technical strength of one stock against all the stocks in its peer group. Chartists can also group stocks according to the technical rank. Stocks in the top 30% will have a technical rank of 70 or higher. Chartists can then focus on these relatively strong stocks for potential long positions on pullbacks. Conversely, chartists can use the technical rank to avoid weak stocks, such as those with a technical rank below 40. As far as new trends emerging, chartists can look for stocks with technical ranks moving out of the middle zone (40-60). A move above 60 would show relative strength improving, while a move below 40 would show an increase in relative weakness. As with all technical tools, SCTR should be used in conjunction with other aspects of Technical Analysis. The StockCharts Technical Rank (SCTR) separates the wheat from the chaff. Relative strength is an important part of a successful trading or investing strategy. Based on the wisdom of John Murphy, SCTR allows chartists to compare the technical strength of one stock against all the stocks in its peer group. Chartists can also group stocks according to the technical rank. Stocks in the top 30% will have a technical rank of 70 or higher. Chartists can then focus on these relatively strong stocks for potential long positions on pullbacks. Conversely, chartists can use the technical rank to avoid weak stocks, such as those with a technical rank below 40. As far as new trends emerging, chartists can look for stocks with technical ranks moving out of the middle zone (40-60). A move above 60 would show relative strength improving, while a move below 40 would show an increase in relative weakness. As with all technical tools, SCTR should be used in conjunction with other aspects of Technical Analysis.
Line 147: Line 147:
 </​code>​ </​code>​
  
-===== Frequently Asked Questions ​=====+===== SCTR FAQs =====
  
-**Q: Why doesn'​t XYZ have a SCTR?** \\ +==== What is the significance of SCTR in a trading or investing strategy==== 
-A: Only those tickers included in predefined ​SCTR universe groups will have SCTR ranking.+The SCTR is powerful tool for comparing the technical strength of one stock against all the stocks in its peer group. It separates the strong performers from the weak ones and is a significant part of a successful trading or investing strategy.
  
-**Q: The SCTR value has been the same for XYZ for a while now, why is that?** \\ +==== Are there any exclusions in the SCTR rankings? ==== 
-A:  That means it is consistently outperforming/​underperforming its peers.+Only ticker symbols in predefined SCTR universe groups will have a SCTR ranking. Leveraged and inverse ETFs are excluded from the SCTR rankings due to their above-average volatility and inverse movements that skew the results. ​The VIX ETF (VXX) is also excluded because it moves inverse to the S&P 500. 
 + 
 + 
 +=== Why does the SCTR value remain ​the same for a while? ​=== 
 +When a SCTR value remains the same for a while, ​it means the stock or ETF is consistently outperforming/​underperforming its peers. 
 + 
 +=== How often are SCTRs updated? === 
 +During the trading day, SCTRs are updated every one to two minutes. 
 + 
 +===== Additional Resources ===== 
 +==== StockCharts In Focus ==== 
 + 
 +The following //​StockCharts In Focus// video, "​Pinpoint the Strongest Stocks with SCTRs",​ takes a deep-dive into all the different ways you can use SCTRs on StockCharts,​ including the SCTR reports, scanning for SCTRs, and charting with SCTRs on both SharpCharts and StockChartsACP. 
 +<​html>​ 
 +<div class="​embed-responsive embed-responsive-16by9">​ 
 +<iframe src="​https://​www.youtube.com/​embed/​ElmvTyK3KqM"​ width="​640"​ height="​360"​ frameborder="​0"​ allow="​accelerometer;​ autoplay; encrypted-media;​ gyroscope; picture-in-picture"​ allowfullscreen></​iframe>​ 
 +</​div>​ 
 +</​html>​
  
-**Q: How often are SCTRs updated?** \\ 
-A:  During the trading day, SCTRs are updated every 1-2 minutes.