Ask Colin

How can I analyse the relative strength of stocks in a large GICS sector like Materials?

The root of this problem is that the ASX had a perfectly appropriate set of sector indexes. However, they sold out to the dark side and now we are stuck with the S&P determined US GIGS sectors that are inappropriate for Australia. The only thing they suit is the US market, which has a different structure to our market and perhaps the local fund managers who want to take an international approach. It also suits S&P, who have the potential to sell the two levels of the GICS structure that are not publicly available. I understand that you can buy the data, but after asking S&P several times and getting no answer, I gave up. I doubt I could afford it anyway.

The best that is available is in the Weekend Australian Financial Review, where the lists of stocks in some of the GICS sectors are broken down another level. Materials, which is the least appropriate general sector, is broken down by Chemicals, Construction Materials, Containers and Packaging, Metals and Mining-Aluminium etc. Of course, it would be good to have a sub-sector index, but at least you can consider stocks that are similar in groups against the Materials index or the All Ordinaries Index.

Insight Trader charting software allows you to analyse the stocks in these sub-groups, if you also have the Database manager service. I have heard that some data vendors are also trying to replicate the old sector indices, but I have no details.