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 insightsâproviding a more complete picture for investors.
This article covers how stock ratings are calculated, but ETFs use a different model: see How the Power Gauge Rating Is Calculated for ETFs.
đ§ How Is the Stock Rating Calculated?
The rating is built 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
Letâs walk through each stepâand then break down all 20 factors.
Step 1: Score the factors
Each factor starts with real-world data, such as earnings growth or insider activity. That data is:
- Normalized, so it can be compared 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: Weight the factors into a raw score
The 20 factors are grouped into four components:Â
- Financials
- Earnings
- Technicals
- Experts
Our proprietary weighting system combines them, giving more weight to factors with higher predictive value. The result is a raw Power Gauge score.
Step 3: Rank the score and assign the raw rating
Raw scores are ranked and divided into seven equal groups, called septiles. Each septile maps to a rating:
| Septile | Share of stocks | Raw rating |
|---|---|---|
| 1 | Top 14% | Very Bullish |
| 2 and 3 | Next 28% | Bullish |
| 4 and 5 | Middle 28% | Neutral |
| 6 | Next 14% | Bearish |
| 7 | Bottom 14% | Very Bearish |
This system keeps the ratings balanced, while still being responsive to major market shifts.
Step 4: Apply the technical overlay (Neutral+ and Neutralâ)
As a final step, the raw rating is checked against the stock's long-term trend, a proprietary 200-day double-exponential moving average shown as the LT Trend line on Chaikin charts.
- Neutral+: a Bullish or Very Bullish stock that has closed below its long-term trend.
- Neutralâ: a Bearish or Very Bearish stock that has closed above its long-term trend.
đ For when the overlay applies, when the original rating comes back, and the falling-trend exception, see What do Neutral+ and Neutral- mean? To find the LT Trend line on a chart, see How to Read a Chaikin Chart.
đ Why Do the Ratings Lean Bullish or Bearish Some Days?
Raw ratings for Russell 3000 stocks always have the same distribution, because they are split into equal septiles. The displayed ratings can still shift as a group.
That's the technical overlay at work. In flat markets, displayed ratings are spread fairly evenly. When many stocks are breaking down, more Bullish stocks are clipped to Neutral+ and the overall distribution skews Bearish. When many stocks are breaking out, it skews Bullish.
𧞠What Are the 20 Power Gauge Factors?
These are the 20 factors, grouped by the four components you see on a stock's Power Gauge Rating page and in its Full Rating Report.
Financials
How financially strong and stable the company is.
| Factor | What it measures |
|---|---|
| LT Debt to Equity | Long-term debt compared to shareholder equity. Lower values generally mean a healthier balance sheet. |
| Price to Book | Stock price compared to the company's book value (net assets). |
| Return on Equity | How effectively the company uses shareholder equity to generate profit. |
| Price to Sales | Market price compared to total revenue. |
| Free Cash Flow | Cash left over after expenses and capital investments. |
Earnings
Past earnings performance and expectations for future growth.
| Factor | What it measures |
|---|---|
| Earnings Growth | Earnings growth over a 3 to 5 year period. |
| Earnings Surprise | Whether actual earnings beat or missed analyst forecasts. |
| Earnings Trend | Whether earnings have been rising, falling or stable over the past year. |
| Projected P/E | Current price compared to projected earnings for the upcoming fiscal year. |
| Earnings Consistency | How steady and predictable earnings have been over time. |
Technicals
The stock's price and volume behavior.
| Factor | What it measures |
|---|---|
| Relative Strength vs. Market | Performance compared to the S&P 500 over 6 months. |
| Chaikin Money Flow Persistency | Buying or selling pressure over 6 months, based on price and volume. See Chaikin Money Flow. |
| Price Strength | How far the current price is from its long-term average. |
| Price Trend (Rate of Change) | Speed and direction of price movement over 42 days. |
| Volume Trend | Short-term trading volume compared to longer-term averages. |
Experts
The views and behavior of analysts, insiders and other market participants.
| Factor | What it measures |
|---|---|
| Estimate Trend | How analysts' earnings estimates have changed over the past 13 weeks. |
| Short Interest | How many shares have been sold short, a sign of negative sentiment. |
| Insider Activity | Buying or selling by company insiders over the past 6 months. |
| Analyst Rating Trend | Recent changes in analyst recommendations, such as upgrades and downgrades. |
| Industry Relative Strength | How the stock's industry is performing compared to the broader market. |
The calculations are run by Portfolio123 using financial data from S&P Compustat. Factors in the Earnings and Experts components are based on S&P Compustat data, and the earnings and estimate values shown on the platform are also sourced from S&P.
đĄ Tip: To see how a stock scores on each factor, open its Power Gauge Rating page and click View Full Rating Report. Each component expands to show its factor bars and a written factor analysis. See How to Use the Power Gauge Rating Page to Check a Stock or ETF.
âď¸ Which Stocks Get a Rating, and How Often Does It Update?
The Power Gauge Rating is recalculated every weekday with fresh data, for stocks with at least one year of trading history and earnings data. Stocks with a short history, such as recent IPOs, may not have a rating. For other reasons a stock may be unrated, see What Is the Chaikin Power Gauge Rating and How Do You Use It?
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