How to Create Custom Moving Averages

The default moving averages shown on a daily chart in MarketSmith are the 50-day and 200-day. Often times it’s helpful to view shorter term moving averages.

This short tutorial walks through how to customize MarketSmith to add a 21-day exponential moving average (EMA).

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Understanding Earnings Stability & EPS Growth Rate

Earning stability is an indicator of the predictability of a companies earnings. Another way to think of it is a volatility ranking of the earnings. The lower the number, the less volatile. Anything under 10 is very stable. For example, an earning stability of 3 indicates a company has consist earnings, quarter to quarter, year over year.

As far as the EPS growth rate, the technical definition follows:

The compound 3-year growth rate calculated using the least squares fit over the latest two to three years’ earnings per share on a running 12-month basis.
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View Top-Rated Institutional Sponsors For Any Stock

The “I” in CAN SLIM stands for Institutional sponsorship. If a top-rated fund has a position in a stock, that’s a positive sign.

With MarketSmith you can search for and flag institutional sponsors. Once flagged, you can quickly view if an institutional sponsor holds a position in a stock.

In this video I’ll walk through the steps to find and flag top-rated sponsors. I’ll also show how to determine if a stock has top-rated funds holding a position.

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Comparing Cash Flow vs EPS

When looking at fundamentals in MarketSmith, Earnings Stability is an indicator of the volatility of a companies earnings. If the volatility is low (e.g. into the single digits) you know a company has consistent earnings and you may choose to dig deeper to better understand if the earnings are consistently up, down or flat.

Cash flow is the net cash a company produces on a per-share basis. By comparing cash flow to EPS we can get a sense of the profitability of a company.

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How to View Extended Hours Pricing

Although I don’t trade on extended hours, I do find it helpful to view pre-market trading as it can provide a glimpse into the overall market sentiment prior to the opening bell.

If you don’t have extended hours pricing enabled, the stock price in the upper right will look as follows:

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Green and Red Arrows in MarketSmith

In the fundamentals section within MarketSmith, you’ll often see red and/or green arrows after EPS estimates, as shown in the screenshot below:

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