Since this is a QP2 discussion group, I don't want to get into a debate on stock selection techniques. What works for one may not (for any number of reasons) work for another. If the IRL/S&P/Exchange indices give you what you want, great. I'm simply suggesting an additional feature that others may be able to take advantage of.
Group/sector rotation and the general market account for a large percentage (pick your own number for large) of a stock's price movement. I like to identify group/sector rotation quickly. I prefer to limit the stocks in a group to the best performing stocks so that the leading groups and the leading stocks in the group can be identified more easily. I also would prefer building the indices using an equal dollar weighted method rather than an average price or market weighted method.
Building the groups isn't that difficult, but it takes some initial effort. IBD lists the top 20 or so (based on RS and EPS) companies in a top performing group everyday. Another approach could be to start with the IRL groups and filter based on whatever you consider relevant (price, volume, RS, etc.). Limit the number of groups to a manageable size of historically leading groups (50 or so) with the top 20 or so companies in each group. Build an equal dollar weighted index for the groups, select the strongest stocks in the strongest groups. Not tough and, in my experience, worth the effort. And something that QP2 could make even easier. And this doesn't take us away from price, volume and time. How do you select the strongest groups and, then, stocks within the groups? Price, volume, time.
joe |
