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Stocks & Commodities V. 32:2 (52-55): Product review: Group Power by Dennis Peterson
Stocks & Commodities V. 32:2 (52-55): Product review: Group Power by Dennis Peterson
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Product review: Group Power by Dennis Peterson
Bollinger Capital Management
PO Box 3358, Manhattan Beach, CA 90266
Phone: 310 798-8855
Email: BBands@BollingerBands.com
Website: www.GroupPower.com, www.BollingerBands.com
System requirements: Internet connection & browser software
Product: Technical analysis website
Price: $25/month; 30-day free trial
Group Power is one of several technical analysis websites from technician John Bollinger and can be found at www.GroupPower.com. Bollinger, known for his widely popular Bollinger Bands envelope technique, created Group Power because he felt that risk/reward prospects are best if you pick a stock in a strong group and a strong sector. The synergy of having the stock, group, sector, and market all moving in your direction can be powerful. Consequently, the site provides analysis that allows you to see which sector or industry group is moving into a position of strength. When you approach this type of problem, there are three questions to answer:
1 In what direction is the market moving?
2 What sectors are moving in the same direction, and as a corollary to that, are the sectors correlated with the market direction?
3 What is the size of the movement, and how does it compare with other sectors?
There may be more than three questions in there, but you get the idea. Lets tackle the first of these: market direction.
Market direction
Which way is the market moving? The first thing to do is define what you mean by market. For Group Power, this is a sophisticated undertaking. The market is defined to be 15 different sectors and each of the sectors has several industry groups, and within each group there are individual stocks. Sounds simple, so wheres the sophistication?
The first sophistication is that some stocks are thrown into a noncorrelated set if they dont behave like the rest of the group. In a final step, the noncorrelated set of stocks is searched to see if any of them move like the rest of the stocks in an industry group. The result is industry groups whose individual stocks behave in a like manner. However, suppose industry group A has 10 stocks, while industry Group B has 100 stocks. If you wanted to compare group A to group B, each stock in A would be contributing 1/10, whereas each stock in group B would be contributing 1/100. This could mean that a single stock in group A could be moving all of group A, where that is not a likely case for any stock in group B.
Bollinger Capital Management
PO Box 3358, Manhattan Beach, CA 90266
Phone: 310 798-8855
Email: BBands@BollingerBands.com
Website: www.GroupPower.com, www.BollingerBands.com
System requirements: Internet connection & browser software
Product: Technical analysis website
Price: $25/month; 30-day free trial
Group Power is one of several technical analysis websites from technician John Bollinger and can be found at www.GroupPower.com. Bollinger, known for his widely popular Bollinger Bands envelope technique, created Group Power because he felt that risk/reward prospects are best if you pick a stock in a strong group and a strong sector. The synergy of having the stock, group, sector, and market all moving in your direction can be powerful. Consequently, the site provides analysis that allows you to see which sector or industry group is moving into a position of strength. When you approach this type of problem, there are three questions to answer:
1 In what direction is the market moving?
2 What sectors are moving in the same direction, and as a corollary to that, are the sectors correlated with the market direction?
3 What is the size of the movement, and how does it compare with other sectors?
There may be more than three questions in there, but you get the idea. Lets tackle the first of these: market direction.
Market direction
Which way is the market moving? The first thing to do is define what you mean by market. For Group Power, this is a sophisticated undertaking. The market is defined to be 15 different sectors and each of the sectors has several industry groups, and within each group there are individual stocks. Sounds simple, so wheres the sophistication?
The first sophistication is that some stocks are thrown into a noncorrelated set if they dont behave like the rest of the group. In a final step, the noncorrelated set of stocks is searched to see if any of them move like the rest of the stocks in an industry group. The result is industry groups whose individual stocks behave in a like manner. However, suppose industry group A has 10 stocks, while industry Group B has 100 stocks. If you wanted to compare group A to group B, each stock in A would be contributing 1/10, whereas each stock in group B would be contributing 1/100. This could mean that a single stock in group A could be moving all of group A, where that is not a likely case for any stock in group B.
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