Stock Ratings in the Power Gauge
The Chaikin Power Gauge Rating is a powerful stock rating system that combines 20 key factors into a single, color-coded score. This score helps forecast whether a stock is likely to outperform or underperform the market over the next 1 to 6 months.
Unlike traditional ratings that rely only on fundamentals or chart patterns, the Power Gauge blends fundamental, technical, and sentiment-based insights—providing a more complete picture for investors.
Overview of the Calculation Process
The Power Gauge Rating is calculated in four steps:
- Score each of the 20 factors based on how a stock ranks within its group
- Apply proprietary weightings to create a raw score
- Group raw scores into rating categories (Very Bullish to Very Bearish)
- Apply a technical overlay to account for current trend behavior
Let’s walk through each step—and then break down all 20 factors.
Step 1: Scoring the Factors
Each of the 20 factors begins with real-world data (like earnings growth or insider activity). That data is:
- Normalized to make it comparable across different companies
- Ranked from 1 to 100, based on the stock’s industry group or the Russell 3000
These ranked scores form the foundation of the Power Gauge.
Step 2: Weighting the Components
The 20 factors are grouped into four components, each with its own weight in the model:
- Financials
- Earnings
- Technicals
- Expert Sentiment
Factors with higher predictive value carry more weight in the calculation. This creates a raw Power Gauge score.
Step 3: Assigning the Rating
The raw score is then placed into one of seven equally sized groups (called septiles) to produce a final rating:
| Raw Score Group | Displayed Rating |
|---|---|
| Top 14% | Very Bullish |
| Next 28% | Bullish |
| Middle 28% | Neutral |
| Next 14% | Bearish |
| Bottom 14% | Very Bearish |
This system keeps the ratings balanced, while still being responsive to major market shifts.
Step 4: Technical Overlay (Neutral+ / Neutral–)
Finally, a technical overlay adjusts the displayed rating based on how the stock is performing compared to its long-term trend (a proprietary version of the 200-day moving average):
- Neutral+: A Bullish or Very Bullish stock that has closed below its long-term trend
- Neutral–: A Bearish or Very Bearish stock that has closed above its long-term trend
These temporary adjustments help the rating stay in sync with what the stock is actually doing—especially during volatile periods.
📘 To learn more about how these adjustments work, see:
What Do Neutral+ and Neutral– Mean?📈 Want to see the trend line? The long-term trend (a proprietary version of the 200-day average) is visible as an blue line on the Chaikin chart.
Learn more in: How to Read the Chaikin Chart
The 20 Factors in the Power Gauge
Below is a breakdown of all 20 factors, organized by their component group:
🧾 Financials
These factors evaluate the company’s financial strength and stability.
| Factor | Description |
|---|---|
| Long-Term Debt to Equity | Compares a company’s long-term debt to its equity. Lower values generally indicate stronger balance sheet health. |
| Price to Book | Compares the stock price to the company’s book value (net assets). |
| Return on Equity | Measures how effectively the company uses shareholder equity to generate profits. |
| Price to Sales | Compares the company’s market price to its total revenue. |
| Free Cash Flow | Represents how much cash the company has available after expenses and capital investments. |
📊 Earnings
These factors reflect past earnings performance and expectations for future growth.
| Factor | Description |
|---|---|
| Earnings Growth | Measures the company’s earnings growth over a 3–5 year period. |
| Earnings Surprise | Tracks whether actual earnings beat or missed analyst forecasts. |
| Earnings Trend | Shows whether earnings have been rising, falling, or stable over the past year. |
| Projected P/E | Compares the current stock price to projected earnings for the upcoming fiscal year. |
| Earnings Consistency | Reflects how steady and predictable the company’s earnings have been over time. |
📈 Technicals
These factors assess the stock’s price and volume behavior.
| Factor | Description |
|---|---|
| Relative Strength vs. Market | Measures the stock’s performance compared to the S&P 500 over 6 months. |
| Chaikin Money Flow | This measures Chaikin Money Flow Persistency over 6 months, and indicates buying or selling pressure based on price and volume patterns. |
| Price Strength | Measures how far the current price is from its long-term average. |
| Price Trend (Rate of Change) | Tracks the speed and direction of price movement over 42 days. |
| Volume Trend | Compares short-term trading volume to longer-term averages to assess momentum. |
👥 Expert Sentiment
These factors reflect the views and behavior of analysts, insiders, and other market participants.
| Factor | Description |
|---|---|
| Estimate Trend | Shows how analysts’ earnings estimates have changed in the past 13 weeks. |
| Short Interest | Measures how many shares have been sold short, indicating negative sentiment. |
| Insider Activity | Tracks buying or selling activity by company insiders over the past 6 months. |
| Analyst Rating Trend | Reflects recent changes in analyst recommendations (e.g., upgrades/downgrades). |
| Industry Relative Strength | Compares the stock’s industry performance to the broader market. |
Other Notes
- The Power Gauge is calculated daily for stocks with at least 1 year of trading history and earnings data
- Stocks with limited history (like recent IPOs) may not have a rating
- ETF ratings are calculated separately and use different logic