Our Philosophy
Our philosophy is as
simple as it is effective: to identify an excess of sentiment regarding
investor opinion on stocks and to measure the market's concurrence with said
sentiment. Who is right about a particular stock, group or sector -- the
bulls or the bears? Our experience suggests that by answering this
question, investors cannot only uncover opportunities otherwise unseen, but
also can avoid the pitfalls of following too big a crowd. By using this
strategy, our subscribers add value to their portfolio decision-making process!
There are few ways
to measure sentiment on a stock-by-stock basis. Erlanger Squeeze Play has found
normalized short selling statistics to be the only method for measuring
investor expectations of individual stocks. We have compiled decades of short
selling data that are unavailable elsewhere, and performed techniques of
normalization and interpretation so our subscribers can for the first time
determine how intense a stock's short selling activity is. The Erlanger Short
Rank measures the intensity (0% is lightest, 100% heaviest) of a particular
stock's short interest position.
Once an investor
uncovers the sentiment picture surrounding a stock by examining the Erlanger
Short Rank, the next step is to determine the market action of the stock.
Erlanger Squeeze Play, LLC. has developed a series of models that use modern
pattern recognition techniques to identify the relative strength or weakness of
a stock's price action. This methodology generates a more accurate measure
without an increase in signal volatility, making it superior to linear
techniques such as slope or rate-of-change computations! Our models are
expressed in the Erlanger Technical Rank: 0% is weakest, and 100% reflects our
strongest model.
Now the investor has
the technical tools to make a more informed investment decision. If the
Erlanger Short Rank shows heavy short selling but the Erlanger Technical Rank
remains strong, the implication that those short sellers are wrong. Often, when
short sellers get caught in such a squeeze, the market moves against them (up)
until they capitulate (evidenced by a subsided Erlanger Short Rank). The
Erlanger Power Rank combines both the Technical Rank and the Short Rank so that
both can be followed by one statistic. Most of the sorting in our reports is
done on the Erlanger Power Rank.
Because we are
interested in the combination of 2 factors, sentiment and price performance,
Phil Erlanger Research goes further in classifying the nature of these
measures. The Erlanger Type Classifications
(types 1 through 4) are as follows:
Type 1: Short
Squeezes (Heavy Erlanger Short Rank and a Strong Erlanger Technical Rank)
Type 2: Recognized
Strength (Light Erlanger Short Rank and a Strong Erlanger Technical Rank)
Type 3: Short
Sellers Are Right (Heavy Erlanger Short Rank and a Weak Erlanger Technical
Rank)
Type 4: Long
Squeezes (Light Erlanger Short Rank and a Weak Erlanger Technical Rank)
For more on Erlanger Type Classifications, click here.
Copyright ©2008 Erlanger Squeeze Play, LLC. All rights reserved.
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