Schaeffer Says

Investor's Business Daily
Online Broker TradeStation Has Plenty Of Survival Skills
Published: 12/19/2005

Brief summary:


This article takes a bullish look at online brokerage TradeStation Group (TRAD: sentiment, chart, options). Although they are smaller and less known that most brokerages, their small niche of active traders is growing much faster than the industry as a whole. "Many of our customers come from regular online brokerages," co-CEO Ralph Cruz said. "They gain more experience in trading and want to move beyond what's available at those other brokers." TRAD stands out because it has software that can scan thousands of stock charts for various patterns. Plus the firm's customers trade at a much higher frequency than most on-line traders - as the average TRAD customer makes 740 trades a year versus 15 for your average E-Trade Financial (ET: sentiment, chart, options) customer. Looking to the future they are trying to get smaller investment firms to use their products, not just home traders.


Contrarian Takeaway:


Few sectors have been hotter than on-line brokerages this year, and TRAD has been leading the charge with the shares up 78-percent year-to-date. Looking at the sentiment on TRAD, it does appear that not many have noticed the shares yet. This is bullish, as it shows there could still be lots of money left on the sidelines. First off, there's very little open interest in near-term options and only two analysts rate it - both suggesting the presence of money on the sidelines. Also there aren't many shorts betting against the shares, but that could just be another sign that no one has shorted the shares because no one has heard of it. In conclusion, TRAD sports a Schaeffer's Equity Scorecard reading of 7.0 out of 10.0, indicating the path of least resistance is probably higher.