The Nasdaq Stock Market is an American stock exchange based in New York City. It is ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange. The exchange platform is owned by Nasdaq, Inc., which also owns the Nasdaq Nordic stock market network and several U.S. stock and options exchanges.
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Performance Spread Indicator Report Tutorial
Performance Spread Indicator Report Tutorial
This report shows you the Total Number of Days a stock is traded, the total Number of Negative Days and the Total Number of Positive Days. And then looks at the probability that a stock is up.
Take for example Wingstop (WING). There have been 134 trading days so far in 2021. Of those 134 How this report works is like this:
Let say Shopify closes up 5% and say the Nasdaq closed up 1%, the Dow was down -.5% and the S&P was down -0.25%
To get the performance spread you would take Shopify’s return for that day and subtract it by the daily return of the Dow, S&P and Nasdaq.
This would look something like this:
| Shop Return: | Index Return: | Performance Spread: |
|---|---|---|
| 5% | Nasdaq: 1% | 5% – 1% = 4% |
| 5% | Dow: -0.5% | 5% – – 0.5% = 5.5% |
| 5% | S&P: -0.25% | 5% – – 0.25% = 5.25% |
In this case this is essentially telling you that SHOP outperformed the Dow 5.5%, the S&P500 by 5.25% and the Nasdaq by 4%.
The point of a performance spread indicator is to show you which stocks are outperforming, under performing or in line with the major indices (Dow, Nasdaq, and S&P500). The higher the positive spread the more a stock is beating that specific indices, the lower the negative spread the more it is losing to those specific indices.
Be careful with this report though. It doesn’t tell the full picture. For example outlier events can happen such as a stock going up 50% in a day for some reason which could skew that companies performance spread indicator and make it look like it is crushing the indices but really it had one great day and the rest have been horrible.
To get around this it is best to take those instances out as well as use some of the other reports make your picks. But also you can look at the Positive Performance Spread Probability which does a better job of normalizing the data. I.E. This looks at all positive spreads (when a stock beats the Dow, S&P or Nasdaq) and adds all those up and then divides that by the total number of returns in that year. This show give you a better idea of what stocks to pick. The higher the performance spread as well as the higher the performance spread probability the better the stock.