Chaikin Stock Research

Chaikin Indicators

Chaikin Analytics, a Philadelphia stock market analytics firm, produces Chaikin Power Tools for individuals and Chaikin Analytics | Professionals. The firm was founded by its namesake Marc Chaikin, who spent over forty years developing stock market tools for institutional investors. The tools utilize algorithms to estimate the future direction of stock prices for individual investments, distributed via desktop and app models.

Chaikin Oscillator

The Chaikin Oscillator was developed in the 1970s. The indicator is based upon the momentum of the Accumulation/Distribution (AD). AD calculates the position of a stock's daily closing price as a fraction of the daily price range of the stock—a fraction that is multiplied by the daily volume in order to quantify the net accumulation or distribution of a stock. AD is expressed mathematically as:

A D = c u m ( C − L ) − ( H − C ) ( H − L ) × V

where "AD" represents the Accumulation/Distribution cumulative total running line, "cum" is an instructive abbreviation meaning "calculate a cumulative total running line", "C" is the daily closing price, "H" is the daily high price, "L" is the daily low price, and "V" is the daily total volume.

The indicator is measured as the difference between the 3-day exponential moving average (EMA) of the AD to the 10-day EMA of the AD. It signals when crossing above or below the zero line or when bullish/bearish departures take place. These signals anticipate the change in direction of the AD. Stock analysts observe a Chaikin Oscillator graph to look for the signal to buy or sell a stock.

Chaikin Money Flow

Chaikin Money Flow (also referred to as CMF) measures Money Flow Volume over a period, typically 20 or 21 days. The indicator oscillates above and below the zero line which indicates a bullish or bearish trend. The indicator is also used to calculate Chaikin’s Accumulation/Distribution (AD).

It is based on the concept that buying support is normally demonstrated by increased volume and repeated closes in the top half of the daily range and that selling pressure is shown by increased volume and recurrent closes in the lower half of the daily range. Rising prices typically accompany buying support and decreasing prices usually occur with selling pressure. The end result is a picture of how money is flowing into or out of a stock.

To determine the CMF one must first determine the Close Location Value (CLV) as follows:

C L V = ( c l o s e 1 − l o w 1 ) − ( h i g h 1 − c l o s e 1 ) ( h i g h 1 − l o w 1 )

The next step is to take the CLV and determine the CMF, as follows:

C M F = ∑ t = 20 t C L V t × v o l u m e t ∑ t = 20 t ( v o l t )

Chaikin Analytics

Chaikin Analytics is a suite of analytics that combine fundamental and technical indicators with proprietary analytics in easy-to-use desktop or iPad applications. The proprietary Chaikin Power Gauge Rating analyzes 5,000 stocks using a 20 factor model. Chaikin Analytics was developed for self-directed investors in order to provide them with access to information generally available only to institutional investors.

The Chaikin Power Gauge Rating uses a basic color scale to indicate the investment potential of a stock: red shows that a stock is bearish, yellow that it has a neutral rating, and green that it is bullish. The 20 factors which make up the rating are organized into four categories: financial metrics, earnings performance, price-volume activity, and expert opinions. One of the factors in the rating is Chaikin Money Flow (CMF). The rating was back-tested on 10 years of data and provided positive results in terms of being able to predict stock performance for individual companies over a range of three to six months.