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factorScan Panel

This post highlights actionList.Pro's new factorScan Panel. The factorScan panel aims to help its users assess trends and activity in the market for fundamental factors of production.


February 25, 2025 01:38:02 PM ET


PONTE VEDRA, FL --(actionList.Pro LLC)-- Economic activity arises from choices made by individuals and institutions seeking to allocate fundamental factors of production to their best and highest use. To that end, the owners of fundamental factors of production, and parties interested therein, are effectively engaged in a perpetual negotiation that serves to allocate fundamental factors of production.


actionList.Pro’s econ101 panel specifies the fundamental factors of production as: money, commodities, labor and real estate. Intellectual property may also be considered, but remains beyond the scope of the studies highlighted in the econ101 and factorScan panels.


factorScan Study Design


To help monitor activity in the market for fundamental factors of production, actionList.Pro maintains the econ101 Stock Index, an index of indexes incorporating equal weighted exposures to the following primary industrial sectors: (1) Agriculture, (2) Basic Materials, (3) Finance and (4) Energy. Two additional custom indexes are included to complete the econ101 index’s construction: (1) Human Resources and (2) Real Estate; bringing the total to six component indexes.


Separately, actionList.Pro maintains a collection of equal weighted stock indexes designed to help reflect the performance of stocks in each of the sectors included in its primary industrial taxonomy. As a reminder, actionList.Pro's primary industrial sector taxonomy is specified as follows:


Primary Industrial Sectors


  • AGRI - Agriculture
  • ATCH - Applied Technology
  • BSCM - Basic Materials
  • CMCL - Commercial
  • FCLT - Commercial Property
  • CNSM - Consumer
  • DTHC - Deathcare
  • DFNS - Defense Systems
  • EDCN - Education
  • NRGY - Energy
  • FNCE - Finance
  • HLTH - Healthcare
  • INDU - Industrial
  • STRX - Infrastructure
  • LSRE - Leisure
  • MDIA - Media
  • RSID - Residential Property
  • TECH - Technology
  • TLCM - Telecom
  • TXPT - Transportation
  • UTIL - Utilities

To complete the factorScan panel’s studies, the aforementioned econ101 and primary industrial sector index series are smoothed with a 21-session triple exponential moving average function. Next, a collection of ratios are calculated that relate the smoothed econ101 index series to each of the primary industrial sector indexes; the black series. Then, to help highlight the past year's trend, a simple linear regression function is applied to complete each of the panel’s studies; the red series. Finally, the calculated ratio and linear regression series are plotted on the chart.


factorScan Panel Utility


The factorScan panel’s charts may applied to help reveal trends in fundamental factor of production owners’ collective negotiating power relative to that of primary industrial sector participants, and changes therein. Upward trends suggest an increase in the negotiating power factor owners have in dealing with interested parties seeking to put those factors to productive use in the specified primary industrial sectors. Similarly, downward trends suggest a decrease in the negotiating power factor owners have with interested parties in the specified primary industrial sectors. Consider the following charts:



aLP factorScan Panel - Healthcare.

Image 1 - factorScan Panel | Healthcare



aLP factorScan Panel - Finance.

Image 2 - factorScan Panel | Finance



The first chart (Image 1 - factorScan Panel | Healthcare) suggests, but doesn't prove, the factor of production owners' collective negotiating power is increasing relative to that of the healthcare sector's members. On the other hand, the second chart (Image 2 - factorScan Panel | Finance) suggests, but doesn't prove, the factor of production owners' negotiating power is decreasing relative to that of the finance sector's members.


The charts may also be considered from primary industrial sector participants' perspectives. E.g., the first chart (Image 1 - factorScan Panel | Healthcare) suggests negotiating power is decreasing for participants in the healthcare sector, and the second chart (Image 2 - factorScan Panel | Finance) suggests negotiating power is increasing for participants in the finance sector.


With that said there are some important considerations to take into account.


  • The studies in the factorScan panel cover the past 252 trading sessions, approximately 1 year.
  • The relationship between property owners and interested parties may not be direct. Among other causes, it may be distorted by supply chain, legal, contract, or productivity related considerations.
  • There are survivorship bias considerations to take into account. The human resources index was created using the return history of currently traded equity securities. So, it may not reflect the returns of all stocks in the sector.
  • Coverage limitations. actionList.Pro’s coverage universe is limited to select issues trading on the NYSE and NASDAQ.
  • Comparability / Consistency. To help mitigate overlap related issues in the ratio calculations, where necessary, the econ101 Index is modified to exclude industries against which it is being compared. E.g., (1) The Agriculture (AGRI) study’s econ101 Index input is calculated without the Agriculture component, (2) The Finance (FNCE) study’s econ101 Index input excludes the Finance component, and so on.
  • Design Exceptions. For historical reasons, the econ101 index’s real estate component consists of a 50/50 split of residential and commercial property related stocks. The Residential Property (RSID) study’s econ101 index substitutes the Commercial Property (FCLT) Index for the econ101 Index’s Real Estate component. Similarly, the Commercial Property (FCLT) study’s econ101 index substitutes the Residential Property (RSID) Index for the econ101 Index’s Real Estate component.

Finally, the factorScan panel’s studies’ usefulness requires some market efficiency related considerations. The famous Dow Theory provides an excellent example of how Wall Street thinks on this subject. Loosely speaking, the Dow Theory specifies that signals produced by the Dow Jones Industrial Average® (DJIA) must be confirmed by signals in the Dow Jones Transportation Average® (DJTA). E.g., a new high in the DJIA must be accompanied by a new high in the DJTA. Signals that aren't confirmed are classified as false signals. One of the Dow Theory's implicit assumptions is that the real economy’s activity is to a degree reliably mirrored in the DJIA and DJTA action. The studies included in the factorScan panel require some consideration of the degree to which the applied indexes reliably reflect activity in their respective sectors. Financial professionals classify the varying degrees of the capital market’s informational efficiency as (1) weak-form, (2) semi-strong form and (3) strong-form efficiency.


If you enjoyed learning about actionList.Pro's factorScan panel, consider this your invitation to register for a no-strings-attached free trial, available at: www.actionlist.pro. And don't forget to share this post with a friend! For updates and news from actionList.Pro, subscribe to the actionList.Pro RSS Feed.


About actionList.Pro


actionList.Pro™ serves as an integrated watchlist platform that positions its customers to independently monitor risk and reward attributes associated with individual stocks, or stock positions, and efficiently draw insight from across perspectives that scale from high-level capital market factors to industrial index and stock-specific price trend strength indicators. It allows for monitoring activities to take place within the context of an informational framework consisting of risk and reward related measures with the potential to drive change, and serves as an enabling technology that provides its customers with meaningful time savings while deepening their stock market insights.


Source: actionList.Pro LLC


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Important Note: This blog post does not contain investment advice. It is published within the scope of actionList.Pro's, Terms of Use Agreement and Privacy Policy. Its content is only current at the time of publication, and may change at any time thereafter. Past performance is not an indication of future performance. You are strongly advised to obtain qualified financial counsel prior to selecting a course of action related to your finances.