13. “ 3” is the weakest position within each quadrant. In quadrants “A” and “B” the second “ 3 ” denotes the least positive momentum. QP M – the second number relates to M omentum
14. “ 3” is the weakest position within each quadrant. In quadrants “C” and “D” the second “ 3 ” denotes the most negative momentum. QP M – the second number relates to M omentum
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19. Analyst Comment May 18, 2001 Price $54.58 Rating: Strong Buy Underlying trends can evolve, harming unwary investors.
Performance is measure against a benchmark. We use the Standard & Poor’s 500 Composite as the benchmark, but any average, or even a sector index can be used. For the Quacera investment program we use a combination of 5 to 15 week performance. Momentum is unique to each stock. The momentum calculation includes the most recent price and all prices from the preceding 150 periods. The periods can be days, hours, or minutes. For the Quacera investment program we use closing prices for the last 150 days. The data is weighted to give the most recent prices a greater influence, but the history is part of the calculation.
Movement toward the top identify those issues out-performing the benchmark. Downward movement reflects under performance compared to the benchmark.
Movements to the right indicate positive momentum, Movements to the left indicate negative momentum.
Quadrants B and C are the primary decision points. “Buy” signals are generated in Quadrant B, positive momentum but under-performing the benchmark. Investors have begun buying, for whatever reason, and if the buying continues it is likely the stock will begin to out-perform the benchmark, moving into Quadrant A. As investor enthusiasm wanes, the positive momentum will slow eventually turning negative, moving the stock into Quadrant C, negative momentum, but still out-performing the benchmark. Time to sell! Securities tend to move in an counterclockwise movement, This is particularly true of sectors, or indexes of similar securities. Exchange Traded Funds ,ETFs, fit this description. In the Quacera investment program we initiate long position is Quadrant B. These positions are sold once they move into Quadrant C. For those accounts able to “short”, we initiate short sales in Quadrant C, which will be covered when the stock enters the B Quadrant.
The QPM Score is based on the: Quadrant Letter The Performance Number The Momentum Number This pinpoints the position of each issue.
Looking at the Performance Number: “ 1” is the best performance in any quadrant. In the “A” and “C” quadrants the “1” denotes the best performance.
The Performance “1” is still the best performance in quadrants “D” and “B”. It is the least negative performance in this quadrants.
The Performance “3” is the poorest performance in each quadrant. In quadrants “A” and “C” the “3” indicates the weakest positive performance
In quadrants “D” and “B” the Performance “3” is the greatest negative performance versus the benchmark.
The second number refers to the momentum. The number “1” is the best momentum in each quadrant. In quadrants “A” and “B” the number “1” is the strongest performance.
In quadrants “C” and “D” the second number “1” identifies the least negative performance.
The second number, momentum, “3” is the poorest momentum in each quadrant. In “A” and “B” the “3” is the weakest positive momentum.
In quadrants “C” and “:D” the momentum number “3” is the greatest negative momentum.
Combining the three: Quadrant Letter, Performance Number and Momentum Number gives the QPM Score. This pinpoints the position.
Traditional analysis is similar to placing a television camera on the 50 yard line. You will see flashes as players cross in front of the camera. You get a sense of the play when John Madden draws his charts. To get a real sense of the game it’s best to begin looking at the entire field, from the blimp, then to focus on a particular part of the field where the action is, and finally get a close-up of the players involved in the action. This is what QPM Radar accomplishes for market analysis. The radar is able to display the entire field, or universe of securities of interest.
Traditional analysis is similar to placing a television camera on the 50 yard line. You will see flashes as players cross in front of the camera. You get a sense of the play when John Madden draws his charts. To get a real sense of the game it’s best to begin looking at the entire field, from the blimp, then to focus on a particular part of the field where the action is, and finally get a close-up of the players involved in the action. It is then able to focus on a specific sector, or group of stocks of interest.
Traditional analysis is similar to placing a television camera on the 50 yard line. You will see flashes as players cross in front of the camera. You get a sense of the play when John Madden draws his charts. To get a real sense of the game it’s best to begin looking at the entire field, from the blimp, then to focus on a particular part of the field where the action is, and finally get a close-up of the players involved in the action. Finally the QPM Radar can follow the movements of an individual security as it moves in the market.
A great part of investment success is to avoid the disasters. This is a replay of the Enron demise in 2001. As of May 18, 2001 the analysis for a major Wall Street firm rated the stock as a “Strong Buy”. The QPM Radar showed the position in Quadrant A, moving to the left.
On July 12 th the analyst reiterated the “Strong Buy” recommendation. The stock was at $48.95 and his target price was $70. QPM Radar showed a move into Quadrant C, a “Sell” and “Sell Short” signal.
On Oct 17 th , the analyst again reiterated the Strong Buy rating, but moved the target price down to $47. The QPM Radar showed the position the Quadrant D, under-performing with negative momentum.
One more time, on Nov 1, 2001, the research analyst encouraged investors to Buy Enron at a price of $12.50 with a target price of $29, anticipating nearly 150% appreciation potential. The QPM Radar was tracking a death spiral.
Finally, on Nov 28 th the analyst changed his opinion, not to “Sell” , it was to late for that, but to “Hold” at 36 cents, with a target price of $1.00, still a 150% appreciation potential. The QPM Score was D3-3., it cannot get worse.
![QPM Radar tracks both performance & momentum. ,[object Object],[object Object]](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)