RE: [CANSLIM] 52-weeks hi/low versus industry group ranking

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] 52-weeks hi/low versus industry group ranking
Date: Mon, 14 Jul 2003 07:27:07 -0500

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Hi Tomas,

The IBD industry rankings are created by:

(1) taking the group as a whole and deriving an average price (they do leave
out some stocks from the group in this measure, but we don't know which or
why)
(2) creating a group relative strength ranking (GRS) for each group based on
the change in that average price over the prior 6 months (70% based on
change since the beginning of the most recent quarter, 30% on change from
the beginning of the previous quarter)
(3) Sorting them by GRS descending
(4) Assigning industry rank accordingly from 1-197.

As you can see, the ranking is based on average prices for the group and it
is based on a "chunky" measurement of change from 2 specific dates until
today. Also, the industry rank is based on the average price behavior of the
group. That means that if you have a couple of high priced stocks relative
to the other stocks in the group, the group's rank will be largely
determined by the higher priced stocks (due to averaging prices). If all
stocks are doing poorly in the market, any ranking system will still rank
one group #1. Conversely, if all stocks are doing well in the market, you
can have a group of stocks that is essentially very healthy, but it could
still be ranked very low in the rankings. Also, as 52 week highs per se are
not part of the GRS measurement, if many groups were filled with stocks
making 52 week highs 2 or 3 months ago, their price action will already have
propelled them higher in the rankings. Groups where many stocks are making
52 week highs late in the rally will then be lower in the rankings.

Katherine


- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Tomas
Sent: Sunday, July 13, 2003 10:08 PM
To: canslim canslim
Subject: [CANSLIM] 52-weeks hi/low versus industry group ranking


I noticed that there is a big discrepancy between the
52-weeks hi/low and industry group ranking in IBD.
Looks like Internet-Content group has been ranked 1
for for the last few weeks.  However, most of the
stocks making new highs report in the 52-weeks hi/low
is in the medical, banks and business svc groups.  Why
is that?  Is the group ranking way off?

Regards,
tomas

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