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IBD use their own customized industry groups, which is part of the problem.
They are also calculating relative strength over the last 6 months, not 30
days.
Calculating Industry relative strength rankings seems like it should be
easy, but it isn't. The first problem is selecting the industry groups. You
need groups that exist as indices as well as folders of company names, so
you can track the behavior of the groups as a whole and then drill down. Of
the comprehensive alternatives, there are the Dow Jones groupings for the US
market - probably the standard, but they are not well tuned for tracking
technology stocks, don't include ADRs and have a number of one-stock groups
- and the Reuters groups that come with MS 9.0 - which do include ADRs (like
IBD) but also a ton of tiny and illiquid stocks, which skews the results
towards small caps and makes filtering mandatory. I believe Yahoo uses the
Reuters selections. I have heard that a number of people like to use TC2000
for this kind of work.
If you don't mind not being comprehensive, you can track a variety of the
indices that are used as the basis for options or ETFs (e.g. SOXX, OSX) or
the ETFs themselves, which will give you volume.
Personally I have ended up with a mishmash of a comprehensive system (I
recently switched to the Reuters data for convenience) with other indices
and ETFs added to it for extra clarity on technology sectors.
Another general point is that it is fine to set up the screen on the basis
of ROC over your chosen period. Some like to use RS against an index - e.g.
the S&P 500 - but the ranking will be identical (you're dividing every data
point by the same number) and the formulas more complicated. I find RS vs.
an index more useful as an indicator.
What would be useful would be a way to assign a number ranking within
Explorer, which would make it much easier to track changes in an industry's
relative strength over time.
I hope no-one told you this was going to be easy..
Andrew
-----Original Message-----
From: Sesha Shayan Nandyal [mailto:s_nandyal@xxxxxxxxx]
Sent: Tuesday, June 29, 2004 9:30 PM
To: equis-metastock users
Subject: [EquisMetaStock Group] How to screen for Industry Group Rankings?
Hello All,
I use the Explorer's Equis - Performance Daily /
Performance Monthly to screen for Industry Group
Rankings. Infact, I use the 30 days ROC() to select
the industry/sectors. Is this the right way to screen
for Industry Groups? Unfortunately, these results
neither tally nor come close to the rankings as
published by Investors Business Daily!
TIA
Sesha
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