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IVolatility.com - data and services usage: Stock Sentiment service

Last week we described the usage of the Intraday Scanner Service and available features. We plan to enhance the functionality of this service - so keep an eye on our announcements. Today we are going to discuss yet another service introduced quite recently. This is our Stock Sentiment – a one-stop service for analyzing stocks performance

Stock Sentiment modules

The service consists of the following sections:

  • Stock Sentiment Summary - stock performance at a glance
  • Price Bands Calculator - an interactive tool for the estimation of price levels probabilities
  • Technical Analysis Charts - interactive charts of the most popular Tech. Analysis indicators
  • Stock Data - relevant stock-level information

Today we will concentrate on the first section of the service.

To avoid confusion, please keep in mind that Stock Sentiment uses End of Day data at the moment.

Stock Sentiment Summary

The main output of this section is a group of six icons – stock trend indicators. Their interpretation is easily surmised – a green upward arrow stands for “Buy” signal and red downward one for “Sell”. If you see an up/down thumbnail near the arrow, this means “Strong Buy” or “Strong Sell” - and can be roughly counted as a double signal. Finally, a question mark stands for “Hold” sentiment. There is also text commentary to the left of the icon. You can check the service User Guide (Adobe Acrobat Reader required) for a complete description of each indicator.

Further analysis is absolutely up to you. The simplest approach is just to count all signals. Let’s check the general market trend and some specific sector for example. We can use a proxy for the general US Market - S&P 500 and for Technical Sector - NASDAQ-100 Shares (QQQ). As of June 10 closing both seem to be definitely bullish - the counting arrows confirms this.

Buy Sell Hold
General Market (SPX) 4 0 3
Tech Sector (QQQ) 5 0 3

Table 1. Sentiment for the entire market and Technical sector.

Though it looks like the market is bullish in general let’s try to find stocks going against the market. Let’s take a look at the free Top stocks page. This page summarizes top gainers and losers based on different indicators. For our analysis we will use just two of them. The first group contains top 5 stocks by the largest change in IV Index from yesterday and the second - top 5 by the lowest IV Index to HV ratio (what we call “Relative Volatility” on the site). Keep in mind that this page stock’s universe is restricted by ‘top 200 stocks by weekly total options volume’ (full coverage is available in the Advanced Ranker service)

If we count ‘stock sentiment’ service indicators for top 5 stocks of the first group (largest IV Index change) we will see the following results:

Buy Sell Hold
JDSU (JDS UNIPHASE CORP.) 3 3 2
USG (USG CORP) 4 1 3
LF (Leapfrog Enterprises Inc) 2 5 2
DDS (DILLARD S INC) 3 4 2
NBIX (NEUROCRINE BIOSCIENCES INC) 0 7 2

Table 2. Sentiment for the top 5 stocks by the change in their IV Index.

As you see prevailing sentiment is “Sell” for this “extreme” group, especially for NBIX:NASDAQ and LF:NYSE.


Fig.1. Sample of Summary module for NBYX:NYSE.

Now let’s have a look at the second group (lowest “Relative Volatility”):

Buy Sell Hold
MO (Altria Group, Inc.) 0 5 4
BEAS (B E A SYSTEMS INC) 0 5 4
GLBCE (Global Crossing Ltd) 1 3 3
MBG (MANDALAY RESORT GROUP) 1 5 3
KKD (KRISPY KREME DOUGHNUTS, INC.) 3 3 4

Table 3. ‘Sentiments’ for the ‘bottom 5 stocks by the Relative Volatility’

Negative sentiment is even more evident in this group, especially for MO:NYSE, BEAS:NASDAQ and MBG:NYSE. This might look a bit strange: low Relative Volatility level commonly means low IV Index and a healthy stock. But on another hand too low IV Index value means that it will increase sooner or later, bringing the stock price down. In any case, Stock Sentiment service takes far more data into account than just IV Index level so the prediction looks more reliable.

As you see combining ‘Stock Sentiment’ signals with recommendations provided by any other ‘ranking’ service – Advanced Ranker, Strategist Scanner or Spread Scanner can prove (or warn against) your strategy choice. Considering all input parameters before making a final decision is a key point in successful trading.

Other sections

Remaining sections information is what our signals are based on. You can read more on that in the User Guide. In the next newsletter we will show how to use interactive service parts - Price Bands Calculator and Technical Analysis Charts.

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