RS Charts of The Week

August 28, 2015

SPYVSAGG zpslznymynz RS Charts of The Week

SPYVSIYR zpsm5wkuzdf RS Charts of The Week

SPYVSGCC zpsz13lt2jx RS Charts of The Week

SPYVSEEM zpsjbermarh RS Charts of The Week

SPYVSEFA zpsh9ykkwx6 RS Charts of The Week

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.

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RS Charts of The Week

August 21, 2015

SPYVSAGG zpshtkdrlli RS Charts of The Week

spyvsiyr2 zps1psh2i6o RS Charts of The Week

SPYVSGCC zpsthiao80z RS Charts of The Week

SPYVSEEM2 zps8n7lznbe RS Charts of The Week

SPYVSEFA zpsfpwl5b7w RS Charts of The Week

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.

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Sector Performance

August 21, 2015

The table below shows performance of US sectors over the trailing 12, 6, and 1 month(s).  Performance updated through 8/20/15.

sector3 Sector Performance

The performance above is based on pure price returns, not inclusive of dividends or all transaction costs.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.    Source: iShares

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Range-Bound

August 19, 2015

On the S&P 500′s trading range (via USA Today):

The daily trading range between the S&P 500′s closing high and low the past six months has been just 4.4%, “which is narrower than any other six-month range in the history of the index,” Bespoke says. What’s more, Bespoke adds, the S&P 500 still has not been up or down more than 3.5% on a year-to-date basis yet in 2015 (and) this is the first year in the index’s history where it was never up or down more than 4% at some point in the year.”

spx1 Range Bound

Source: Dorsey Wright, Price returns only, not inclusive of dividends, as of 8/18/15

However, it has been a different story from a sector perspective:

sector2 Range Bound

Source: iShares, Price returns only, not inclusive of dividends, as of 8/18/15

Past performance is no guarantee of future returns.

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Inefficient Markets

August 19, 2015

Seth Klarman the the topic of market efficiency:

The reason that capital markets are, have always been and will always be inefficient is not because of a shortage of timely information, the lack of analytical tools, or inadequate capital.  The Internet will not make the market efficient, even though it makes far more information available, faster than ever before, right at everyone’s fingertips.  Markets are inefficient because of human nature — innate, deep-rooted, permanent.  People don’t consciously choose to invest with emotion — they simply can’t help it.  (Source: Excess Returns, Vanhaverbeke)

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Favorite Warren Buffett Quotes

August 19, 2015

Some of my favorites:

It has been helpful to me to have tens of thousands (of students) turned out of business schools taught that it didn’t do any good to think.

(Warren Buffett, Grant, 1991)

To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets.  You may, in fact, be better off knowing nothing of these.

(Warren Buffett, 1996 Letter to the Shareholders of Berkshire Hathaway)

Success in investing doesn’t correlate wtih IQ once you’re above the level of 125.  Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.

(Warren Buffett, BusinessWeek 1999)

Buffett Favorite Warren Buffett Quotes

Photo credit: Biography.com

Source: Excess Returns, Vanhaverbeke

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A Stock Picker’s Market

August 17, 2015

Ben Levisohn in the 8/15/15 Barron’s with an important stat for active managers:

It would be easy to look at the disconnect between the S&P 500 and its components and see it is a sign of trouble ahead. But there is another explanation as to why the market has been relatively stable: Stocks have become increasingly less likely to move in the same direction as the S&P 500. There’s a measure for this—implied correlation. Implied correlation measures how much options traders expect any given individual stock to trade in lock-step with the benchmark.

In bad times, implied correlation surges higher, approaching 100%, as it did during the financial crisis, when it didn’t matter what you owned, everything was falling. When implied correlation falls, it means that investors are more inclined to trade each stock according to its own merits. And wouldn’t you know? Last week, implied correlation fell below 43% for the first time since 2008.

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RS Charts of The Week

August 14, 2015

SPYVSAGG zpsahgtfxem RS Charts of The Week

SPYVSIYR zpshy8ckicg RS Charts of The Week

SPYVSGCC zpscsorfum1 RS Charts of The Week

SPYVSEEM zpsb8nnztjo RS Charts of The Week

SPYVSEFA2 zpsvyfcrcma RS Charts of The Week

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.

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Sector Performance

August 14, 2015

The table below shows performance of US sectors over the trailing 12, 6, and 1 month(s).  Performance updated through 8/13/15.

sector1 Sector Performance

The performance above is based on pure price returns, not inclusive of dividends or all transaction costs.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.    Source: iShares

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How Much Does A Cow Weigh?

August 8, 2015

NPR’s Planet Money confirms the conclusions found in James Surowiecki’s findings from The Wisdom of Crowds.  Click here for the podcast.

Should give you a much clearer understanding of how the stock market works.

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Sector Performance

August 7, 2015

The table below shows performance of US sectors over the trailing 12, 6, and 1 month(s).  Performance updated through 8/6/15.

sector Sector Performance

The performance above is based on pure price returns, not inclusive of dividends or all transaction costs.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.    Source: iShares

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RS Charts of the Week

July 31, 2015

SPYVSAGG zpsy6t4dbjx RS Charts of the Week

SPYVSIYR zpslyhalaky RS Charts of the Week

SPYVSGCC zpslv9gne2f RS Charts of the Week

SPYVSEEM zps5cn3nci1 RS Charts of the Week

SPYVSEFA zpsh1nga0h5 RS Charts of the Week

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice

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Sector Performance

July 24, 2015

The chart below shows performance of US sectors over the trailing 12, 6, and 1 month(s).  Performance updated through 7/23/15.

sector Sector Performance

The performance above is based on pure price returns, not inclusive of dividends or all transaction costs.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.    Source: iShares

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RS Charts of The Week

July 24, 2015

SPYvsAGG zpsqs8hhsrs RS Charts of The Week

SPYVSIYR zpseyq1jwj4 RS Charts of The Week

SPYVSGCC zps4496omgh RS Charts of The Week

SPYVSEEM zps2degwxvt RS Charts of The Week

SPYVSEFA zpsiljjarcr RS Charts of The Week

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.

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RS Charts of The Week

July 17, 2015

SPYVSAGG zps6wq1b2li RS Charts of The Week

SPYVSIYR zpsn6sijbru RS Charts of The Week

SPYVSGCC zpsaodjvepm RS Charts of The Week

SPYVSEEM zpss7nhx4ut RS Charts of The Week

SPYVSEFA zpsulqn7drx RS Charts of The Week

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.

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Quote of the Week

July 16, 2015

Leda Braga at Delivering Alpha (Institutionalinvestor.com):

The business of investment management is the business of data management.  The algorithmic approach is the best way to do that.

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DWA Q3 2015 Update Webinar Replay

July 15, 2015

On Tuesday, we conducted a webinar to discuss the current state of the market through the lens of DWA. We like to hold these calls at the beginning of each quarter, as that is when we reconstitute and rebalance our Technical Leaders Indexes, which are tracked by the 14 PowerShares ETFs. Tom Dorsey, Founder of DWA, Paul Keeton, Vice President, and John Lewis, Vice President and Portfolio Manager, hosted the discussion, which is now available through the link below.

Follow this link to access a replay of this webinar.

Follow this link to access a PDF of the presentation slides used in this webinar.

Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any se­curity. This email and included links do not attempt to examine all the facts and circumstances which may be relevant to any company, industry or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if neces­sary, seek professional advice. Dorsey, Wright & Associates, its officers, directors, partners and/or other associated persons may own, hold options, rights or warrants to purchase some of the securities or assets mentioned in this email, or close equivalents. Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss. 

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NYSE High-Low Index Below 30

July 10, 2015

The NYSE High-Low Index is a short term indicator calculated by dividing the number of stocks making new 52-week highs by the stocks achieving new highs and new lows. The daily NYSE HILO reading is based upon a 10-day moving average of the aforementioned calculation, which smooths out the movement over time.  It doesn’t speak often, but when it does we have found it to be meaningful.

nysehilo NYSE High Low Index Below 30

The last 5 times the NYSEHILO has reversed to a column of X’s from below 30% are shown below (and the change in the S&P 500 90 days later):

sp NYSE High Low Index Below 30

 Source: Yahoo! Finance.  Price return only, not inclusive of dividends.

A more in depth study of the NYSE High-Low Index can be found here (Harold Parker’s 1996 paper published in the MTA Journal).

It is worth noting that this index has not yet reversed to a column of X’s.  However, it may be time to start thinking about putting new money to work.

Investors cannot invest directly in an index.  Indexes have no fees.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.

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RS Charts of The Week

July 10, 2015

SPYVSAGG zpsceb1pebs RS Charts of The Week

SPYVSGCC2 zps7pt0xhbf RS Charts of The Week

SPYVSIYR zpsiwirs1w9 RS Charts of The Week

SPYVSEEM zpsooslac1f RS Charts of The Week

SPYVSEFA zpswhu65app RS Charts of The Week

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.

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Tweet of the Day

July 8, 2015

Via Ben Carlson:

china Tweet of the Day

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Tweet of the Day

June 23, 2015

Why an exclusive focus on yield can be a problem, via Bespoke:

bespoke Tweet of the Day

Ultimately, total return is what matters.

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RS Charts of The Day

June 19, 2015

SPYVSAGG zpsciamomhk RS Charts of The Day

SPYVSGCC zpstzxo9vuu RS Charts of The Day

SPYVSIYR zps9w8v1gpq RS Charts of The Day

SPYVSEEM zpsjwrxzhft RS Charts of The Day

SPYEFA zpsdtkkujwe RS Charts of The Day

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.

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Sector Performance

June 19, 2015

The chart below shows performance of US sectors over the trailing 12, 6, and 1 month(s).  Performance updated through 6/18/2015.

gics Sector Performance

The performance above is based on pure price returns, not inclusive of dividends or all transaction costs.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.    Source: iShares

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A World of Languages

June 18, 2015

A proportional visualization of the world’s most popular languages from Open Culture:

languages A World of Languages

 

Click here for a larger format.

And here is a mind blowing stat:

Although the 23 languages visualized above are collectively spoken by 4.1 billion people, there are at least another 6700 known languages alive in the world today.

From an investment perspective, analyzing companies across all these languages, countries, and cultures can be a daunting, if not impossible, task.  However, a momentum strategy is built from just one input–price–and that common denominator enables us to use essentially the same relative strength engine on a variety of investment universes.  Just one of the many benefits of a momentum-based approach to investing.

HT: Jim O’Shaughnessy

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RS Chart of The Day

June 11, 2015

SPYVSAGG zps8x6f6vpf RS Chart of The Day

 

SPYVSIYR zpsuu3trfai RS Chart of The Day

 

SPYVSGCC zpsrtgzessq RS Chart of The Day

spyvseem zpssk14f92h RS Chart of The Day

 

SPYVSEFA zpsqijnvhsv RS Chart of The Day

Point and Figure RS Charts are calculated by dividing one security by another and plotting the ratio on a PnF chart.  When the ratio is rising, it is plotted in a column of X’s and reflects the numerator outperforming the denominator.  Likewise, when the relative strength ratio is declining, it is plotted in a column of O’s and reflects the outperformance of the denominator.

http://Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  This example is presented for illustrative purposes only and does not represent a past recommendation.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security.  This post does not attempt to examine all the facts and circumstances which may be relevant to any product or security mentioned herein.  We are not soliciting any action based on this document.  It is for the general information of clients of Dorsey, Wright & Associates, LLC (“Dorsey, Wright & Associates”).  This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.  Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.

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