It’s a pretty safe bet that most retail investors don’t know the difference between a Fibonacci Arc and a stochastic momentum band. In fact, many financial professionals probably don’t either because technical analysis, particularly in Asia, has traditionally been the field of a very small number of specialists.
One company, though, is trying to make sure that investors can reap the benefits of technical analysis without having to review a university level mathematics text first.
Technical analysis attempts to identify the prevailing market psychology under the premise that markets are not random – they have trends that repeat. This is done using charts and historical analysis of key statistics. The use of this kind of analysis goes back to the development of the Dow Theory by Charles Dow around 1900.
Hong Kong-based Powerticker has developed a complex artificial intelligence (AI) system to bring the latest technical analysis techniques to novices in a simple, easy-to-use format. The product is called IntelliGENESIS, and most of its work is done behind the scenes – running complex algorithms to analyze the performance of a stock.
Market indicators, simple and exponential moving averages, trend strength and momentum indicators, such as stochastics or relative strength index (RSI), are just a few of the areas that it analyzes. The Java-based interface then presents a brief summary of indicators from the analysis and, in the simplest result of all, an animated arrow character that points up or down depending on the stock’s predicted direction.
Powerticker currently offers analysis of any of the 800 stocks listed in Hong Kong, but CEO Eugene Ka says the company is looking at expanding that to other markets soon. The company’s products have already been incorporated in the trading web sites of customers such as Wing Lung Bank and Royal Bank of Canada.
Ka says that his AI analyst is a perfect product for online brokers and banks to use to supplement their retail investor offerings. “Usually they just put research reports online,” he says. “But investors don’t always want to wade through the reports, and often they’re out of date anyway.”
IntelliGENESIS, adds Ka, is like having your own 7/24 assistant scanning through and interpreting the kind of charts and statistics usually only found on a Bloomberg terminal.
Powerticker also has a range of other products that complement the IntelliGENESIS analyst. For the more cynical investor, the Trading System's back-testing function enables them to delve behind-the-scenes – testing the stock analysis with different parameters and examining the detailed charts.
“It exemplifies the power of AI in performing tasks previously thought of as impossible by any human manager,” says Ka.
There are also additional Java applets that enable an investor to keep track of a portfolio, with the software acting as a portfolio manager reminding the clients when to enter or exit a position.
For the indecisive investor there is also Pro-Picker, which can pick stocks for you based on both your own preferences and on a thorough technical analysis of stocks that match your criteria.
Powerticker has also recently signed a deal to become the exclusive AI analysis provider for Standard & Poor's (S&P). Using an AI text reader it will distill the essence of various S&P research products and select the most relevant and time-critical information to the end user. The results will be incorporated into the IntelliGENESIS display.
"The aim in providing Pro-Picker, My Portfolio and Trading System [with optimization] is to further show investors how powerful AI can be in investment analysis. AI will not only replicate what a human portfolio manager does but also go beyond what a human can achieve," says Ka.
