Using Alternative Financial Data as a Medium-Term Swing Trader | TickerTrends.io
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What is Alternative Financial Data?
Alternative financial data relating to stocks refers to non-traditional sources of information that investors and analysts use to gain insights about a company’s performance, market trends, or the broader economy. Unlike traditional data, such as financial statements or regulatory filings, alternative data can offer a more timely and granular view of factors that impact stock prices. Some examples of alternative financial data include:
Social Media Sentiment: Analyzing posts on platforms like Twitter, Reddit, and Instagram to gauge public sentiment toward a company or stock. This can reveal how consumer or investor sentiment may impact a stock’s price movement.
Web Traffic and App Usage: Monitoring website visits and app downloads to estimate consumer interest in a company’s products or services. This can provide early signals of rising or falling demand before earnings reports.
Credit Card or Transaction Data: Aggregated data from consumer spending patterns can provide insights into a company’s sales trends in real time. For example, increased credit card spending at a retailer could indicate a strong quarter.
Satellite Imagery: Satellite photos of store parking lots, factory activity, or supply chain data can help analysts estimate a company’s sales, inventory, or production levels.
Google Trends: Search volume data from Google can give an indication of rising consumer interest or curiosity about certain products, brands, or even market events.
Shipping and Supply Chain Data: Insights from shipping logistics, such as port activity or freight shipping data, can indicate production levels, delivery speeds, or disruptions in a company’s supply chain.
Job Listings and Hiring Trends: Analyzing job postings or hiring activity can reveal insights into a company’s growth or contraction, especially in technology or operational roles.
Product Reviews and Ratings: Customer feedback on platforms like Amazon can provide insights into product quality, consumer satisfaction, and potential future revenue.
Mobile Geolocation Data: Data from mobile devices can show foot traffic to physical stores, which can be used to estimate sales and performance for retail or hospitality stocks.
These alternative data sources are often used by hedge funds, institutional investors, and increasingly retail investors to gain an edge by understanding trends and risks that aren’t immediately visible through traditional financial reports.
As a medium-term swing investor, why should you care about alternative data at all?
As a medium-term swing trader, you might believe that alternative data is only relevant for short-term day traders or long-term investors. But alternative financial data can provide crucial insights that align perfectly with your trading strategy.
Understanding and leveraging this data helps you spot emerging opportunities, manage risk, and sharpen your timing in the market. Whether you’re holding a stock for weeks or months, alternative financial data allows you to better gauge short- to medium-term trends that could directly impact your positions.
Using an alternative data platform like TickerTrends (tickertrends.io) can serve as a valuable tool in organizing your stock watchlist and monitoring medium term trends in keywords related to the products and services they operate within.
Sector & Company Analysis for Swing Traders
For example, let’s say you’re interested in trading energy drink stocks. You think Celsius Energy ($CELH) is gaining share and doing well. Traditional stock analysis would involve waiting for 3 months at a time to wait for company earnings to come out. This is too long of a period to know whether the company is still growing enough to justify the high expectations it has. This is where alternative financial data comes into the mix to save the day.
By using an alternative data platform like TickerTrends (tickertrends.io), you can type in “celsius drink (trend)” and instantly track how global consumers’ Google search interest in the keyword. As a medium-term swing trader, it could also be helpful to apply a moving average to smooth out some of the noise in the data as shown.
This real-time data is valuable because, as a swing trader, you’re looking for trends that could move the stock price over the next few weeks or months.
Pre and Post-Earnings Trend Analysis
Alternative financial data, such as website traffic, search trends, and social media mentions, can provide early signals about a company’s performance before the official earnings report is released. For instance, if a company you’re watching has experienced a surge in web traffic or search volume leading up to the earnings report, it might suggest increased consumer interest or demand, hinting at a potential earnings beat. Be careful to always analyze the growth rates in alternative data you see with analyst expectations though!
As a medium-term trader, spotting these signals early allows you to position yourself ahead of the earnings release, optimizing your entry point. By the time traditional data sources catch on, you could already be in a strong position to profit from the post-earnings price reaction.
If the data shows ongoing strength after an earnings report, it could indicate that the stock is likely to maintain its upward trend, making it a great candidate for a medium-term trade. By using alternative data to validate or challenge what’s presented in the earnings report, you can make more informed decisions on whether to hold or exit your position after the earnings event.
Risk Management & Opportunity Hunting During Volatility
During market corrections, how do you know what stocks to continue holding or buy? Financial alternative data should identify the top contenders! By tracking keywords that closely match a company’s revenue, like say “lululemon.com (web)” vs $LULU actual revenue.
Swing traders equipped with vast amounts of financial alternative data have a massive advantage over other market participants trading without any sense of the data, not being able to confidently make buy or sell decisions.
Additionally, earnings season is notorious for its unpredictability. A company could report great numbers but still see its stock drop due to forward guidance or market sentiment. Alternative financial data helps medium-term traders manage this risk by providing additional context beyond just the earnings report. For example, if a company beats earnings but alternative data, like declining social media mentions or reduced search volume, suggests weakening interest or demand, this could be a warning sign to exit the trade before the broader market catches on. Alternatively, if the stock dips despite strong alternative data trends, it might present a buying opportunity for a rebound in the coming weeks.
Medium-Term Trend Discovery
Alternative financial data is also extremely important for discovery of new medium term trends. TickerTrends has a page called “Exploding Trends” that shows a curated list of thousands of terms, showcasing a 5-year view of terms. New idea discovery is always useful for finding future investments (and protecting against new consumer trends that risk existing legacy investments!) A medium-term investor might find “abercrombie” as an example and be able to analyze $ANF stock closer to decide whether to swing the stock long.
This discovery is only possible through curated trend analysis tools like Exploding Trends, made easier by TickerTrends.
Continuous Ticker Tracking
Alternative financial data is also useful for medium-term investors because of its usefulness in tracking all existing positions one holds. Tracking all stocks at once is difficult as an individual investor! I’ve personally found it useful to use the “Data Screener” on TickerTrends to view all my watchlist stocks’ linked keywords at a glance. There it shows the year-over-year value as well as 3-month and 6-month % change of keywords you’ve added to your watchlist stocks.
Knowing that most of these values are going up year-over-year is probably quite important to determining the health of all your existing positions. This is a valuable tool for risk management and monitoring a large breadth of stocks.
Conclusion
All-in-all, medium-term investors sometimes misunderstand alternative financial data because they think it is more an inter-quarter, short-term form of analysis on a company. This couldn’t be further from the truth! This type of data has vast applications for analyzing the medium and longer-term trends and health of a specific company or sector. Being organized and staying on top of long term consumer trends is important to know what long term growth rates to expect in the stocks you hold.
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I would like to try a day or week long. Is there a trial period somewhere? Thx