AFP Expert Stock Screener

 

The APF Expert Stock Screener is a powerful screener which aligns BOTH fundamental and technical analysis.

 

Q: When will I receive the reports?

The report is sent out 3 times a week (unless there are public holidays and non-trading days). Usually the report is sent hours after the market closes, containing the end of day prices of Monday, Wednesday and Friday. If you do not receive reports from us after 2 business days, and our emails did not land up in your junk folder, kindly contact us and we may request for an alternate email address to reach you.

Q: How to use the Screener?

If you are focused on Technical Analysis:

One common way to use the technical analysis numbers is to filter for monthly, weekly and daily greater than 0.50. This will show all the stocks with bullish market sentiment. From here, some traders will add additional filters like price (penny stocks), fair value deviation, sector focus etc.

 If you are focused on Fundamental Concensus Target Price:

For investors who are focused on the fundamental concensus target price, they would sort the deviation from largest to smallest to see how the stocks are priced relative to their concensus target price. We tend to like viewing this info in 2 dimensions. Obviously it is useful to know how many percent a stock is under or over-valued. In addition, we especially like to see how the stock ranks relative to the rest of the market. In other words, the former looks at absolute over/under-valuation, while the latter looks at relative over/under-valuation.

Q: What is alignment “Yes / No”?

As you know, the key feature of the Screener is alignment between Fundamental and Technical analysis. It will be tiring to look row by row to identify stocks with all columns indicating bullishness. So the last column, alignment “Yes/No” was created to aid the user in screening out the stocks that display bullishness in every component.

 For example, if you sort based on “Yes”, the Screener will display stocks that are bulllish in 4 aspects:

1. Fundamentally – as valued by banks and research houses

2. Daily Charts

3. Weekly Charts

4. Monthly Charts

 

Q: Do we buy when alignment is “Yes”? How accurate is it?

For Fundamental Analysis:

Assume a company is listed on your local stock exchange, and it’s share price closed at $1.00 at 5pm today.

Analyst X from Goldman Sachs gives it a target price of $1.40.

Analyst Y from UBS gives it a target price of $1.80.

Analyst Z from DBS give it a target price of $0.50

The consensus, or average price = $1.23

As such, based on the “experts”, this stock has 23% upside.

For the Technical Analysis portion, it is based on Ichimoku. Similar to Elliot Waves, this is commonly cited on Bloomberg and used at Financial Institutions. The intricacies of the algorithm are proprietary and developed by APF Trading.

Expert Stock Screener does not serve as financial advice on the merits or suitability of any stock, nor do we make any recommendation for trades. It simply allows users to find stocks based on analyst valuations, aligned with technical analysis. Not being a fund, it has no track record.

How do we use it:

We align fundamentals and technicals, and visit the charts of the stock. If it fits our risk reward ratio, we enter the trade. We know of clients who employ only fundamental analysis and screen for stocks before diving into their annual reports.

Q: How are the sectors defined?

The Expert Stock Screener employs the Global Industry Classification Standard (GICS) – A standardized classification system for equities developed jointly by Morgan Stanley Capital International (MSCI) and Standard & Poor’s. The GICS methodology is used by the MSCI indexes, which include domestic and international stocks, as well as by a large portion of the professional investment management community.

The GICS hierarchy begins with 10 sectors and is followed by 24 industry groups, 67 industries and 147 sub-industries. Each stock that is classified will have a coding at all four of these levels.

The sector classification used in the Expert Stock Screener is the 24 Industry groups. Using 10 sectors would be too broad while using 67 industries and 147 sub industries is too specific for a single market. These lower hierarchy classification is more meaningful for world wide stock classifications. Therefore, 24 Industry Groups is the optimal for single market stock universe.

Read on for more information about the GICS:

The GICS system was established in 1999 and has since become widely followed through direct use by portfolio managers and benchmarking to MSCI indexes. All told, more than 26,000 stocks worldwide have been classified by GICS, accounting for more than 95% of the world’s listed market capitalization. MSCI estimates that more than $3 trillion in assets is benchmarked to its MSCI funds, many of which are sector-specific.

The main goal of GICS is to allow all market participants to classify stocks by standardized industry definitions. GICS is used to make portfolio diversification and overall asset allocation decisions from within a common framework.

GICS competes with the Industry Classification Benchmark (ICB) system, which is maintained by Dow Jones and London’s FTSE Group. In practice, most of the same sector and industry designations exist in both standards.

Q: Why are some stocks not in the list?

Stocks are not in the list if they fall under the following categories:

1. No Analyst coverage in the last 3 months

2. Insufficient data for meaningful technical analysis

The best feature of the screener is alignment between fundamental and technical analysis, so we only display information that will be meaningful to the user. Stocks without analyst coverage tend to be of lower liquidity and volume. Technical analysis is thus less reliable.

Q: What is the indicator used in the screener?

The basis for the technical number calculated is the Ichimoku Kinko Hyo, an award winning Japanese technical indicator which can be used to trade currencies, commodities, futures, and stocks. Ichimoku means: one glance, Kinko means: equilibrium (or balance), and Hyo means: chart, which reads “one glance equilibrium chart”, describing how traders can very quickly discern price action of an asset, and form trading decisions effectively.

We quantify the various elements of the Ichimoku charts to derive a percentage bull/bear. This number reflects the market sentiment of the particular stock at that specific moment. Please watch the videos in the link below to understand the basics of the Ichimoku!

http://www.asiapacfinance.com/e-learning

Q: What is the reputation of Ichimoku which is used for your TA basis? How ‘accurate’ is it?

Ichimoku is widely used in Japanese trading rooms and is gaining widespread interest in the western markets too. International Federation of Technical Analysts further endorsed the sound principles behind Ichimoku by incorporating it into the Certified Financial Technician (Advanced Level).

Major corporate and investment banks regularly publish analysis based on the Ichimoku, not surprisingly, the most active banks are Mizuho and Nomura Bank. Major news wires such as Reuters and Bloomberg commonly cite Ichimoku analysis from bank analysts in their market reports.

This topic is also gaining a lot of attention as there is increasingly more contributions to renown technical analysis journals such as IFTA Journal and MTA Journal of Technical Analysis.

Among traders, Ichimoku is definitely reputed to be a useful overlay to price charts.

It is hard to accurately test the “hit rates” per say due to a certain degree of subjectivity and discretion involved in using the Ichimoku, just like powerful tools such as Elliot Waves. Experience however allows a trader to gauge that it is more likely correct than wrong. In such a setup, it is profitable if a trader employs a “let the winner run, cut the loser short” method to trading.

With reference to the Stock Screener, it very effectively shows a snapshot of current sentiment.

Q: (daily, weekly, monthly) 23%/63%/75%….this means?

The technical analysis is largely based on the Ichimoku Kinko Hyo, a Japanese trend following indicator used widely in institutions. Our proprietary algorithm looks at 21 factors of the Ichimoku Kinko Hyo and quantifies a number for users. This number is a snapshot of the sentiment of the mass psychology of traders at the current moment.

One very important aspect of technical analysis is to seek alignment across multiple time frames. When the indicator is aligned across time frames, it increases the probability of the potential. This explains why we have daily, weekly and monthly.

23%/63%/75% means that the longer and medium term outlook is bullish and the current bull trend is very strong (63%/75% bull). On the daily shorter time frame, it is slightly bullish. Across all time frames, markets are generally bullish about this stock, but perhaps a trader would want to wait to see if the shorter time frame would increase its bull percentage to confirm this trend.

(This is only an example of trading strategy. We do not give investment advice. This screener is a tool to enable traders to very quickly scan the market for possible stocks to buy and to alert a trader to exit when the market is turning down.)

Q: How will I use the Fair Value Deviation to set my target price?

Fundamental Analysis: Once fair value deviation is zero or negative, the stock is fully valued or overvalued respectively, based on analysts consensus.

Q: When will I sell the Stock that I bought? Is there a way to come up with a figure as my Target Price for a particular stock?

This depends on your risk appetite and investment horizon. The screener tells us this:

Fundamental Analysis: Once fair value deviation is zero or negative, the stock is fully valued or overvalued respectively, based on analysts consensus.

Technical: When daily/weekly/monthly are all negative, the stock is displaying bearish price action.

You may want to consider these 2 scenarios as red flags, and decide from there if you want to exit.

Q: Does the subscription come with the report of the market research and analysis report from the various research houses?

No it does not. Each stock can have up to 50 analysts covering the stock, it will challenging to send to clients thousands of reports. Which is why the screener is so valuable, it puts all the information on one page.

Q: Can I use this Screener to go short?

For bearish setups, the fundamental column will be less relevant because brokers do not recommend stocks for shorting.

However, the technical daily/weekly/monthly would still be relevant. While we look for percentages greater than 50% for technical bullish, the converse applies for technical bearish, where less than -50% for daily/weekly/monthly indicate a bearish chart.

As the screener was built for going long, the alignment column will not apply for shorting purposes.

In summary, a chart’s “bearishness” ranges from 0 to negative 100%. If you are looking for bearish momentum, you can visit the daily/weekly/monthly columns for charts less than -50%.

SUBSCRIBE HERE to save your stock screening time and capture the trading opportunity in this volatile stock market.

  

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