The table below shows the performance of a universe of mid and large cap U.S. equities, broken down by relative strength decile and quartile and then compared to the universe return. Those at the top of the ranks are those stocks which have the best intermediate-term relative strength. Relative strength strategies buy securities that have strong intermediate-term relative strength and hold them as long as they remain strong.
Last week’s performance (10/12/09 - 10/16/09) is as follows:
The relative strength laggards had the best performance last week, following two weeks of strong performance for the relative strength leaders.
I suspect that the further we get from the bear market low, the better that relative strength strategies will perform. There always seems to be major changes in leadership following bear market lows and it takes time for new leadership to assert itself.
