No Ax to Grind

June 20, 2011

Tyler Craig makes a good point about those selling newsletters (with a bullish or bearish bias):

It seems one could make the case for or against virtually any viewpoint or strategy depending on the objective.  For example, if I sold a bearish newsletter I would no doubt discount any bullish news while trumpeting the slightest bearish developments with much fanfare.  On the other hand, were I in the business of selling hope to the masses I would frequently gloss over any bearish developments while championing the bullish.  Some cling to one idea or strategy and beat their proverbial drum day in and day out.

I think this is one of the main reasons that many pragmatists tend to gravitate to relative strength.  Relative strength is just math and math doesn’t have an ax to grind.

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Weekly RS Recap

June 20, 2011

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 (6/13/11 – 6/17/11) is as follows:

Sub-par performance for high relative strength stocks last week.

Energy, Materials, and Technology took it on the chin last week, while some of the other sectors held up quite well.

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