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 Gold Customer
Joined: 1/27/2005
Posts: 44
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I am using a block diagram to calculate the 365 day rate of change of earnings. The calculations do not seem to be correct. Please let me know how to handle this. I have shared two charts that show the problem.
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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Did you choose 365 as the Period of the Rate of Change Percent to determine a 1-Year Rate of Change Percent in Earnings? If so, you might want to try something between 250 and 260 instead as they are better approximations of the number of Trading Days in a year (I usually use 252).
Another thing to keep in mind is that you are calculating a Percent Change on something that can be zero or negative. This is generally a big no no and shouldn't be done. The Percent Change when going from zero to a positive number is infinity and the determining the "correct" algorithm required to calculate a "percent change" from a negative number to a positive number would be contentious at best and most likely be considered an invalid result as well.
If you are actually calculating a Rate of Change Percent and want a Percent as the result, you should also probably not be dividing the result by 100 (although that is fine if you don't want the result expressed as a percentage).
Keeping my thoughts of what might be wrong in mind, what do you see that makes you think the "calculations do not seem to be correct."
Keeping these thoughts in
-Bruce
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Gold Customer
Joined: 1/27/2005
Posts: 44
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Please take a look at my latest shared chart named "Chart" (pretty creative, huh?). Also look at shared chart named "Chart2) for the calculation with period = 365.
For AAPL, earnings on date = 6/18/09 are 5018. Earnings for date = 6/18/09 are 4348. If I do a ROC for 252 days, the result is 2869. If I change the period for the ROC to 365 days, the ROC is calculated to be -13662. How can this be?
Also, on the same chart, the ROC is plotted, and shows a negative ROC in July 2008. AAPL earnings have been increasing ROC should not show negative for any period in recent history??
Please explain.
Thanks.
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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Got it. I had not taken into account that all of the Fundamental Indicators in StockFinder are only reported on a weekly basis. You'll need to use a Period of 52 on a 1-Day Chart as a result.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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