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Compares the change in a company's 4-week stock price change to the industry average, looking for instances where a company's price performance significantly underperforms the industry price performance. In order to prevent standard price fluctuation from causing a company to fail this test, the 13 week performance measure has been adjusted by 35%.
Fails if: This company is underperforming relative to its industry by more than 35%.
Considering normal patterns of buying and selling in the market, this particular risk alert signal is likely to be triggered very frequently. That's because many investors often do the same thing, if not at the exact same time, then in reasonably close temporal proximity. So if a stock underperforms its industry peers by a substantial amount (35 percent according to this test), it may mean that there really is reason to be bearish, or it may mean that that buying in response to bullish factors has been completed in this stock with the attention shifted to other stocks in the same industry that warrant attention.
Alerts:
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