At the end of March we began tracking two new indexes based on our Technical Leaders methodology. The two new indexes follow Small Capitalization stocks and stocks traded on the NASDAQ exchange. We use our Technical Leaders methodology for three other indexes: Domestic Equities, Developed Markets Foreign Equities, and Emerging Markets Equities. These three indexes are licensed by PowerShares and you can purchase ETF’s based on the (tickers: PDP, PIZ, and PIE respectively).
These two new indexes aren’t licensed by an ETF provider so you can’t directly invest in them. We like the concept for both indexes because history shows that relative strength works very well with small cap stocks. The NASDAQ Technical Leaders is also very intriguing because there are many companies in that universe with very dynamic business models, and those are the type of companies that relative strength is very good at identifying and capitalizing on.
The constituents for both indexes are below:
The performance for the second quarter was so-so. Both indexes had a huge first quarter (as did most RS strategies) so they remain well ahead of their benchmarks for the year.
If you have any questions about the indexes please post them in the comments section.