Here's the calculation used for the returns:

The easy-to-use rating system is unique in that it uses "traffic lights" to illustrate the model’s analysis. The strongest rating is two green lights; the weakest rating is two red lights. You may click on the Performance or Potential lights for some of the details behind the Ratings. Lists of changes in the Ratings and the best and worst Performance and Potential Rating are available by clicking the Lists button in the navigation bar.  The explanation here is for mutual funds, but it is applicable to groups, sectors and the market.

• Performance Rating:
  The FundsTrader performance rating is a front-weighted, two-year, risk-adjusted, relative-strength rating. By front weighted, we mean that more emphasis is placed on the most recent data. We use two years of data as we feel this is the optimum trade-off between history and relevancy. To risk adjust the rating, we calculate the fund's responsiveness to down-moves in the market. If the fund falls more than the market on average, then the funds rating is penalized. Relative strength means that the raw data for a fund is compared to all other funds in the universe and ranked accordingly.
  
  
• Potential Rating:
  The Potential rating for a fund is calculated by combining the EquityTrader Potential ratings for the ten stocks that most nearly match the trading pattern of the fund. Each stock's Potential rating is determined by a fuzzy logic engine that evaluates a set of 54 rules. The fuzzy logic model is unique to EquityTrader and was developed by John Bollinger, who is also well known for his Bollinger Bands. Both fundamental and technical factors are considered in arriving at the Potential.
  

The default chart depicts prices for the past 90 days with Bollinger Bands. Each bar consists of the open, high, low and close for the period.  Bollinger Bands are included on all charts. Bollinger Bands are bands drawn around the price structure that answer the question as to whether prices are relatively high or low. They are governed by volatility. In their standard form, the upper and lower Bollinger Bands are the 20-day simple moving average plus and minus two times the 20-day standard deviations, respectively. The middle band is simply the 20-day moving average.

• Tabs - Timeframe:
  On the left hand side of the chart are three tabs, Day, Week and Month. The default setting is for a chart of daily closing prices. By selecting from the other tabs you will get a chart with closing weekly prices or closing monthly prices.

  On the right hand side of the chart are seven tabs. The default setting is for a chart with 240 days of closing prices. By selecting from the other tabs you will get a chart with prices for 30, 60, 90, 120, 180, 240 or 360 days.

• Tabs - Lower chart - Supporting Indicators:
  The tabs below the chart allow you to select one of four sets of technical indicators to help you interpret the price chart. The default chart includes volume (red bars) and a Normalized 50-day Moving Average of volume (horizontal blue line).

  The other support chart options which can be selected with a tab are Supply/Demand, Relative Strength or Momentum.
  

  1. MACD
     The MACD ("Moving Average Convergence/Divergence") is a trend following momentum indicator that shows the relationship between two moving averages of prices. To Calculate the MACD subtract the 26-day EMA from a 12-day EMA. A 9-day dotted EMA of the MACD called the signal line is then plotted on top of the MACD.
     There are 3 common methods to interpret the MACD:
     1. Crossovers - When the MACD falls below the signal line it is a signal to sell. Vice versa when the MACD rises above the signal line.
     2. Divergence - When the security diverges from the MACD it signals the end of the current trend.
     3. Overbought/Oversold - When the MACD rises dramatically (shorter moving average pulling away from longer term moving average) it is a signal the security is overbought and will soon return to normal levels.
     
     
  2. Relative Strength
     This charts the relative strength of the security in relation to its parent group (blue line) and the S&P (green line). Relative strength indicators are used to portray a mutual fund's price action in relation to another item. Shown is price action in relation to the market as a whole (the S&P) and in relation to the mutual fund's industry group.
  3. Momentum
     This charts two lines; the green line is momentum and the pink line is internal strength. Momentum indicators depict the rate of change of the underlying item. There are many approaches to this, but all try to answer the same question, How fast?
     
     
• Alert Signals:

  There are two type of discrete signals on our charts, PowerShifts and Pivots.

  1. Powershift:
     A positive PowerShift signal occurs when a security has become severely oversold and strengthens enough to potentially break the decline. Positive PowerShift signals are marked by a rising wedge with a green core plotted beneath the day on which they occurred. 
     
     A negative PowerShift signal is just the opposite of a positive PowerShift with a small variation in the logic and is marked by a falling wedge with a red core plotted above the day on which it occurred.
     
     
  2. Pivot:
     A negative Pivot occurs when a severely oversold security strengthens and then fails. A pivot sell is marked by a red minus sign plotted above the day it occurs.
     A positive Pivot is the reverse of a negative Pivot, again with a small change in the logic, and is marked with a green plus beneath the day on which it occurred.
     
     

  There is a difference in the logic between the positive and negative signals, based upon the idea that declines generally precede at a faster pace than advances. (The old saw goes, "Down is faster!")

  Pivots usually, but not necessarily, occur after PowerShifts. Conceptually Pivots are companions to PowerShifts and should mark reaction highs after important lows and vice versa. An idealized chart is presented below.