Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] 52-weeks hi/low versus industry group ranking
Date: Tue, 15 Jul 2003 10:37:30 -0500
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Hi Ron,
Welcome back.
I thought I would add a description of the VV industry ranks to round out the
comparison of HGSI, DGO and VV:
VectorVest (VV) uses a proprietary indicator called RT (Relative Timing) as the
basis for their group rankings. Each stock in the database is assigned an RT and
all stocks in an industry, regardless of price, are then averaged to create the
RT for the industry itself. The value of the average RT for an industry is then
sorted from highest to lowest to assign an industry rank from 1 to 195ish (this
changes periodically as they make adjustments to their industries).
The RT itself is essentially an indicator of the direction and velocity of the
price movement of a stock. Imagine a rubber band attached to a stick. The stick
represents the the 13 week exponential moving average. The more the price is
stretched above the 13wk EMA, the closer the RT value is to 2. The more the
price is stretched below the 13wk EMA, the closer the RT value is to 0. If the
price is very near the 13 week EMA, the RT value is 1.
2 things in particular add to the "faster" rankings changes in VV vs. DGO:
(1) For ranking purposes, only 13 weeks is used vs. 26 weeks for DGO industry
rankings.
(2) The RT is responsive to the speed and direction of the 13 week price change
in the stocks within the industry because the EMA places more weight on more
recent prices than does a simple moving average. If the stock launches a high
velocity move in one direction or another, the RT moves quickly toward 2 or 0,
because the "stretch" from the EMA itself is also taken into account.
As with all industry ranking systems, it's important to remember that they
represent the *average* action of stocks within the industry and so always have
limitations. With VV's industry ranking system:
(1) This means that if the stocks within the industry behave essentially
similar, the average RT upon which the Industry Rank is based is somewhat
meaningful. If, however, you have some stocks behaving badly and some stock
behaving well, they average out to "neutral."
(2) The RT measurement itself has limitations. For example, there is nothing in
the RT measurement itself that takes into account the *direction* (slope) of the
13 wk EMA. So, You can have an RT >1, meaning the stock is above the 13 wk EMA,
but it could easily be a *declining* EMA.
(3) The price one pays for a shorter term indicator of industry health/ranking
is that it tends to increase the volatility in the rankings over time. For
example, if you look at a sample VV industry ranking, you can see how quickly an
industry can move from low to high in the rankings and back. By itself, this is
not problematic, but it does point out the importance of matching the industry
ranking time frame to the investing strategy timeframe. In an "Ask Bill" column
a day or so ago, a local farmer asked whether the IBD's A/D ranking was a
lagging indicator. The IBD answered (paraphrasing) that they consider 13 weeks
to be short term and as such, do not believe that the A/D lags. They also
stated that it was the "fastest" of their indicators. That makes sense only
because stock their RS Ranks are based on 1 year and their Group RS Ranks are
based on 6 months. Guess it all depends on your perspective. I'd say A/D is
definitely "faster" than the other measurements, but I wouldn't conclude that it
doesn't "lag."
Sample VV industry ranking. Note that lower rankings are "better", so the graph
is essentially upside down:
http://www.breakoutwatch.com/katherine/SampleVVRTR.JPG
Katherine
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Ron Brown
Sent: Tuesday, July 15, 2003 9:07 AM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] 52-weeks hi/low versus industry group ranking
Hi Gene,
This is Ron Brown from the HGS Investors board.
I am not familiar with V V's groups, but as you well know, you can set your
you own time frame in HGSI for group rotation in addition to standard Ian Slow
and Ian Fast and Wilder, we are able to make our own settings based on % price
changes over any length of time.
Personally, I look at % price changes for one day, since the beginning of the
week, and five day changes to see if short term strength is confirming long term
group strength. If not, this may be an indication of early rotation in or out
of a group.
I just rejoined this mailing list, and will not plug HGSI, but I will be
available to answer questions. The answers may not be immediate, but I will
answer questions when I have time.
Ron
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Gene Ricci
Sent: Tuesday, July 15, 2003 9:17 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] 52-weeks hi/low versus industry group ranking
Roger,
> 1) VectorVest - fastest
> > 2) HGSI - not quite as fast
Gene
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<DIV><SPAN class=3D093081215-15072003>Hi Ron,</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>Welcome back.</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>I thought I would add a =
description of the=20
VV industry ranks to round out the comparison of HGSI, DGO and =
VV:</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>VectorVest (VV) uses a proprietary =
indicator=20
called RT (Relative Timing) as the basis for their group rankings. Each =
stock in=20
the database is assigned an RT and all stocks in an industry, regardless =
of=20
price, are then averaged to create the RT for the industry itself. The =
value of=20
the average RT for an industry is then sorted from highest to lowest to =
assign=20
an industry rank from 1 to 195ish (this changes periodically as they =
make=20
adjustments to their industries).</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>The RT itself is essentially an =
indicator of=20
the direction and velocity of the price movement of a stock. Imagine a =
rubber=20
band attached to a stick. The stick represents the the 13 week =
exponential=20
moving average. The more the price is stretched above the 13wk EMA, the =
closer=20
the RT value is to 2. The more the price is stretched below the 13wk =
EMA, the=20
closer the RT value is to 0. If the price is very near the 13 week EMA, =
the RT=20
value is 1.</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>2 things in particular add to the =
"faster"=20
rankings changes in VV vs. DGO:</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003>(1) For ranking purposes, only 13 =
weeks is=20
used vs. 26 weeks for DGO industry rankings.</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003>(2) The RT is responsive to the =
speed and=20
direction of the 13 week price change in the stocks within the=20
industry because the EMA places more weight on more recent prices =
than does=20
a simple moving average. If the stock launches a high velocity move in =
one=20
direction or another, the RT moves quickly toward 2 or 0, because the =
"stretch"=20
from the EMA itself is also taken into account.</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>As with all industry ranking =
systems, it's=20
important to remember that they represent the *average* action of stocks =
within=20
the industry and so always have limitations. With VV's industry ranking=20
system:</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>(1) This means that if the stocks =
within the=20
industry behave essentially similar, the average RT upon which the =
Industry Rank=20
is based is somewhat meaningful. If, however, you have some stocks =
behaving=20
badly and some stock behaving well, they average out to "neutral." =
</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>(2) The RT measurement itself =
has=20
limitations. For example, there is nothing in the RT measurement itself =
that=20
takes into account the *direction* (slope) of the 13 wk EMA. So, You can =
have an=20
RT >1, meaning the stock is above the 13 wk EMA, but it could easily =
be a=20
*declining* EMA.</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>(3) The price one pays for a =
shorter term=20
indicator of industry health/ranking is that it tends to increase the =
volatility=20
in the rankings over time. For example, if you look at a sample VV =
industry=20
ranking, you can see how quickly an industry can move from low to high =
in the=20
rankings and back. By itself, this is not problematic, but it does point =
out the=20
importance of matching the industry ranking time frame to the investing =
strategy=20
timeframe. In an "Ask Bill" column a day or so ago, a local farmer asked =
whether=20
the IBD's A/D ranking was a lagging indicator. The IBD answered =
(paraphrasing)=20
that they consider 13 weeks to be short term and as such, do not believe =
that=20
the A/D lags. They also stated that it was the "fastest" of their=20
indicators. That makes sense only because stock their RS Ranks are based =
on 1=20
year and their Group RS Ranks are based on 6 months. Guess it all =
depends on=20
your perspective. I'd say A/D is definitely "faster" than the other=20
measurements, but I wouldn't conclude that it doesn't =
"lag."</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>Sample VV industry ranking. Note =
that lower=20
rankings are "better", so the graph is essentially upside =
down:</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003><A=20
href=3D"http://www.breakoutwatch.com/katherine/SampleVVRTR.JPG">http://ww=
w.breakoutwatch.com/katherine/SampleVVRTR.JPG</A></SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<DIV><SPAN class=3D093081215-15072003>Katherine</SPAN></DIV>
<DIV><SPAN class=3D093081215-15072003></SPAN> </DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
<DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
size=3D2>-----Original Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Ron=20
Brown<BR><B>Sent:</B> Tuesday, July 15, 2003 9:07 AM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> RE: [CANSLIM] 52-weeks =
hi/low=20
versus industry group ranking<BR><BR></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D710395114-15072003>Hi=20
Gene,</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D710395114-15072003></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D710395114-15072003>This=20
is Ron Brown from the HGS Investors board. </SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D710395114-15072003></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D710395114-15072003>I am=20
not familiar with V V's groups, but as you well know, you can set =
your=20
you own time frame in HGSI for group rotation <FONT size=3D2>in =
addition to=20
standard Ian Slow and Ian Fast and Wilder, we are able to make our own =
settings based on % price changes over any length of=20
time.</FONT></SPAN></FONT><FONT face=3DArial color=3D#0000ff =
size=3D2><SPAN=20
class=3D710395114-15072003></SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D710395114-15072003></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D710395114-15072003>Personally, I look at % price changes for =
one day,=20
since the beginning of the week, and five day changes to see if =
short=20
term strength is confirming long term group strength. If not, =
this may=20
be an indication of early rotation in or out of a =
group.</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D710395114-15072003></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D710395114-15072003>I=20
just rejoined this mailing list, and will not plug HGSI, but I will be =
available to answer questions. The answers may not be immediate, =
but I will answer questions when I have time.</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D710395114-15072003></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D710395114-15072003>Ron</SPAN></FONT></DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
<DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
size=3D2>-----Original Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Gene=20
Ricci<BR><B>Sent:</B> Tuesday, July 15, 2003 9:17 AM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> Re: [CANSLIM] 52-weeks =
hi/low=20
versus industry group ranking<BR><BR></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">Roger, </FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV>
<DIV> > 1) VectorVest - fastest <BR>> > 2) HGSI - not =
quite as=20
fast <BR></DIV>
<DIV><FONT face=3D"Comic Sans MS">Gene</FONT></DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"><FONT=20
face=3DArial=20
size=3D2></FONT> </BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY></HTM=
L>
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