Momentum Rules the World

June 2, 2015

Momentum is the rule, not the exception.  It is how the world generally works, not an anomaly.  We really should be less surprised to learn that research suggests that momentum is an effective way to generate excess returns over time.   Momentum is pervasive, both in the financial markets and in life in general.  I was struck by this passage in Andre Agassi’s autobiography, Open:

Our best intentions are often thwarted by external forces—forces that we ourselves set in motion long ago.  Decisions, especially bad ones, create their own kind of momentum, and momentum can be a b*@!~ to stop, as every athlete knows.  Even when we vow to change, even when we sorrow and atone for our mistakes, the momentum of our past keeps carrying us down the wrong road.  Momentum rules the world.  Momentum says: Hold on, not so fast, I’m still running things here.  As a friend likes to say, quoting an old Greek poem: The minds of the everlasting gods are not changed suddenly.

Agassi wrote this about a period in his life (around 1997) that was filled with defeat (both personal and professional), drugs, and yet a desire for a change for the better.  Agassi found that past decisions created a momentum-effect in his life that made it very difficult for him to change course.  Eventually, Agassi was able to right his own ship in many ways, including returning to the top of the tennis world to win the 1999 French Open and, as he writes in his book, discover a much deeper sense of purpose by embarking on an effort to bring charter schools to at-risk children and communities.  Fascinating autobiography and worthwhile read.

These same principles apply in the financial markets.  Some companies do thing better than others—think culture, incentives, vision, etc.  Those companies that are more successful than their peers tend to have their stock prices rewarded accordingly.  Furthermore, those companies that perform better than their peers often do so for extended periods of time.  In other words, there is momentum in the underlying fundamentals of the company which tends to lead to momentum in the price of its stock.  The best companies tend to get overbought…and then stay that way for extended periods of time.  The opposite is also true, once a company becomes an underperformer it can stay that way for years at a time.  The result is that far from the market being statistically normally distributed, the market actually has fat tails.  Consider the following from The Capitalism Distribution published by BlackStar Funds a number of years ago.

BlackStar Momentum Rules the World

If, by employing a disciplined momentum strategy, you are able to capture a bunch of the returns of those positive outliers and avoid much of the negative outliers, your chances of generating favorable returns over time are very good.

Thus, before you refer to momentum as an anomaly in an otherwise efficient market, you might pause and ask yourself if momentum is really a deviation from the normal order of things.  For me, it fits right into the pattern of life.

A relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.

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RS Chart of The Day

June 2, 2015

SPYVSIYR zpsoxi5jxm1 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.

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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SMA Performance Update

June 1, 2015

June 1, 2015

Performance of our Systematic Relative Strength Portfolios is shown below. International, Core, Growth, Aggressive, and Balanced are ahead of their benchmarks so far in 2015.

1 SMA Performance Update

To receive the brochure for these portfolios, please e-mail andy@dorseywright.com or call 626-535-0630. Click here to see the list of platforms where these separately managed accounts are currently available.

Total account performance shown is total return net of management fees for all Dorsey, Wright & Associates managed accounts, managed for each complete quarter for each objective, regardless of levels of fixed income and cash in each account. Information is from sources believed to be reliable, but no guarantee is made to its accuracy. This should not be considered a solicitation to buy or sell any security. Past performance should not be considered indicative of future results.

The S&P 500 is a stock market index based on the market capitalizations of 500 leading companies publicly traded in the U.S. stock market, as defined by Standard & Poor’s. The Barclays Aggregate Bond Index is a broad base index, maintained by Barclays Capital, and is used to represent investment grade bonds being traded in the United States. The 60/40 benchmark is 60% S&P 500 Total Return Index and 40% Barclays Aggregate Bond Index. The MSCI EAFE Total Return Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the United States and Canada and is maintained by MSCI Barra. The Dow Jones Moderate Portfolio Index is a global asset allocation benchmark. 60% of the benchmark is represented equally with nine Dow Jones equity indexes. 40% of the benchmark is represented with five Barclays Capital fixed income indexes.

Each investor should carefully consider the investment objectives, risks and expenses of any Exchange-Traded Fund (“ETF”) prior to investing. Before investing in an ETF investors should obtain and carefully read the relevant prospectus and documents the issuer has filed with the SEC. ETFs may result in the layering of fees as ETFs impose their own advisory and other fees. To obtain more complete information about the product the documents are publicly available for free via EDGAR on the SEC website (http://www.sec.gov)

There are risks inherent in international investments, which may make such investments unsuitable for certain clients. These include, for example, economic, political, currency exchange, rate fluctuations, and limited availability of information on international securities.

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RS Chart of The Day

June 1, 2015

SPYVSAGG zps6oklrsuu 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.

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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Weekly RS Recap

May 30, 2015

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 (5/26/15 – 5/29/15) is as follows:

ranks4 Weekly RS Recap

This example is presented for illustrative purposes only and does not represent a past recommendation.  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. 

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Buy the Winners

May 29, 2015

In GBTATom Dorsey explains the concept of momentum:

 If I gave you a list of the 100 best golfers worldwide and asked you to pick who you thought would be in the top 10 at the end of the next quarter, who would you pick? My guess is you would pick the current top ten to be in the top three months from now. Even if I asked you to pick the ones who would be in the top ten after one year, you would probably pick the current top ten.

At the end of the contest some would have fallen out and some would have moved up, but the majority would still be in the top ten. This is outperformance. It relates to Newton’s Law of motion, which suggests that objects that are in motion tend to stay in motion until an extended force acts upon them. So, in my world this means that stocks that have good fundamentals, in a market that in general is supporting higher prices, and the Point & Figure trend chart pattern clearly shows that demand is in control of the stock, tend to continue to do well. Golfers who have good fundamentals, are in good shape, and at the top of their game, tend to continue to do well.

Buy the winners.

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RS Chart of The Day

May 29, 2015

SPYVSEEM zpsknaxolpf 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.

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

May 29, 2015

The chart below shows performance of US sectors over the trailing 12, 6, and 1 month(s).  Performance updated through 5/28/15.

sector4 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 Chart of The Day

May 28, 2015

SPYVSGCC zpssj6wch6g 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.

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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Momentum Environments

May 28, 2015

How consistent are Momentum returns?  This is among the most frequently asked questions about Momentum (and about any investment strategy for that matter).  One way to answer this question is to look at the following table from a white paper published by RBC Capital Markets.  According to their research, Momentum outperformed the S&P 500 in every decade since the 1930′s.  Yes, the margin of outperformance was larger in some decades than others, but Momentum outperformed in each.  You will notice from the table that this was not true of Value or Growth, which both experienced decades of underperformance.

Ken French Momentum Environments

However, that is certainly not to say that Momentum outperforms every year.  I do find it entertaining that many critics of active management use the failure of active strategies to outperform every year as an argument against active management.  It is reasonable to expect the sun to rise each morning.  It is reasonable to expect your mother to love you.  But, it is incredibly irrational to believe that an active strategy should outperform every year!

The environments when Momentum tends to perform best is when trends are most stable.  In environments with major changes in leadership, Momentum tends to underperform.  One way to visualize these environments is by looking at our Relative Strength Spread.  This RS Spread takes a universe of U.S. mid and large cap stocks (S&P 900) and ranks them by their relative strength.  We divide the top quartile of the ranks by the bottom quartile to see when the leaders are outperforming the laggards.  A chart of the RS Spread over the last 3 years is shown below:

spread 3 Momentum Environments

A couple observations:

  • The RS leaders underperformed the latter part of 2012 and some of the first part of 2013, but the majority of 2013 was spent with a steady rising RS Spread
  • The RS leaders had a pullback in the spring of 2014, but then stabilized and saw sharp improvement towards the end of 2014
  • The last couple months have been fairly choppy for the RS Spread, but in recent weeks the RS Spread has moved higher and is on the cusp of moving back above its 50 day moving average

Here is that same chart over the past 25 years:

RS Spread lt Momentum Environments

Some observations:

  • RS leaders have outperformed the RS laggards over time, but the RS Spread has certainly not always been smooth
  • The 1990′s had a relatively stable rising RS Spread with a huge move higher in the late 1990′s during the Tech boom
  • The two biggest laggard rallies occurred toward the end of major bear markets and in the first leg of new major bull markets (late 2002-early 2004 and in much of 2009)
  • The RS Spread has been relatively flat from late 2009 through late 2014

It is important to note that the RS Spread tells you nothing about absolute returns.  The absolute returns of a high relative strength strategy could be positive, flat, or negative in a rising, flat, or falling spread.  All it is telling you is how the RS leaders are performing compared to the RS laggards.  Given the relatively flat RS Spread for much of the past 5 years, I would not be surprised at all to see a strong rising RS Spread over the next 5 years, which could bode very well for RS strategies.

We happen to believe that Momentum is the most robust factor available and that it deserves a meaningful place in investor’s portfolios.  I believe that investors would be well served to have reasonable expectations about the type of returns and frequency of outperformance likely to be achieved by Momentum strategies over time.  If they do, they are more likely to correctly position it in a portfolio and to reap the rewards that we believe will accrue to long-term investors in Momentum strategies.

A relative strength or Momentum strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.

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High RS Diffusion Index

May 28, 2015

The chart below measures the percentage of high relative strength stocks that are trading above their 50-day moving average (universe of mid and large cap stocks.)  As of 5/27/15.

diffusion2 High RS Diffusion Index

The 10-day moving average of this indicator is 69% and the one-day reading is 73%.

This example is presented for illustrative purposes only and does not represent a past recommendation.  The performance above is based on pure price returns, not inclusive of dividends or all transaction costs.   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 Chart of The Day

May 27, 2015

SPYVSIYR zps2zlvleun 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.

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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Relative Strength Spread

May 27, 2015

The chart below is the spread between the relative strength leaders and relative strength laggards (universe of mid and large cap stocks).  When the chart is rising, relative strength leaders are performing better than relative strength laggards.    As of 5/26/15:

spread2 Relative Strength Spread

This example is presented for illustrative purposes only and does not represent a past recommendation.  The performance above is based on pure price returns, not inclusive of dividends or all transaction costs.   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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Separating the Wheat from the Chaff

May 26, 2015

Vincent McCarthy, CFA makes the case for employing tactical asset allocation strategies:

In the active management world, increased volatility can actually create opportunities for active managers to outperform. Research by Standard & Poor’s has shown that during periods of high dispersion — measured as the average difference between the return of an index and the return of each of the index’s components — there is a wider spread of active manager returns. In other words, increased dispersion separates the wheat from the chaff…

…We do not live in a static world. Even the most sophisticated economic and financial models have their limitations. We are all part of the very world we try to model, and despite the assumptions of many of the models we use, we are not always rational. As investors, if we can accept that a significant amount of what actually happens is outside our control, we can better design portfolios that are more adaptive to the circumstances of the environment that prevails.

From the lows of 2009, the world’s major central banks have helped orchestrate a situation whereby any reasonable strategic asset allocation delivered exceptional returns. But as we get deeper into this bull market and as central banks begin to move in opposite directions, we are likely to see the divergence theme play out more across asset class returns, warranting a more dynamic approach to asset allocation that incorporates tactical decisions.

Of course, the vantage from which to assess this changing environment is firm specific, based on available resources, which will dictate how well positioned one is to make tactical asset allocation calls. For most investors, I believe a prudent approach is to allocate capital to an investment manager with a strong track record of dynamically allocating across and within asset classes, allowing the manager sufficient flexibility around the allocation parameters and the use of portfolio insurance.

I believe McCarthy’s description of “an investment manager with a strong track record of dynamically allocating across and within asset classes” would apply very well to the Arrow DWA Tactical Fund (DWTFX).  Over the past five years, the fund has outperformed 88% of its peers in the Morningstar Moderate Target Risk category:

dwtfx Separating the Wheat from the Chaff

Source: Morningstar, a/o 5/22/15

See www.arrowfunds.com for more information.

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.  The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Dorsey Wright is the signal provider for the Arrow DWA Tactical Fund (DWTFX) and the Arrow DWA Tactical ETF (DWAT).  See www.arrowfunds.com for a prospectus.

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RS Chart of The Day

May 26, 2015

SPYVSAGG zps846hno4w 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.

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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Weekly RS Recap

May 26, 2015

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 (5/18/15 – 5/22/15) is as follows:

ranks3 Weekly RS Recap

This example is presented for illustrative purposes only and does not represent a past recommendation.  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. 

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Quote of the Week

May 22, 2015

Janet Yellen today in a speech in Providence, RI:

I am describing the outlook that I see as most likely, but based on many years of making economic projections, I can assure you that any specific projection I write down will turn out to be wrong, perhaps markedly so.

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Sector Performance

May 22, 2015

The chart below shows performance of US sectors over the trailing 12, 6, and 1 month(s).  Performance updated through 5/21/15.

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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Momentum on the Sector Level

May 21, 2015

It was over a year ago now that we took our Technical Leaders Indexing methodology—used to build the suite of PowerShares DWA Momentum ETFs—down to the sector level.  On February 19, 2014 Dorsey Wright became the index provider for the 9 sector ETFs shown in the table below.  Bringing this methodology to the sector level opens up a whole range of implementation possibilities, including employing sector rotation strategies that trade not just cap-weighted sectors, but can now also include momentum-weighted sectors.

Some quick facts about these Momentum Sector ETFs:

  • PnF relative strength is used to select the holdings for these ETFs (click here for a white paper on PnF RS best practices)
  • These ETFs can hold Small, Mid, and Large Cap U.S. stocks
  • The number of holdings can range from 30-75.  When Small and Mid caps have favorable relative strength, the number of holdings will tend to expand
  • The indexes are rebalanced on a quarterly basis
  • The members of the index are weighted by momentum so that the stocks with the best relative strength receive the most weight

A quick look at YTD performance of these sector momentum ETFs is shown below:

sector momentum Momentum on the Sector Level

Source: Yahoo! Finance.  1/1/15-5/20/15.  The performance above is based on total returns, inclusive of dividends, but does not include all transaction costs.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.

As shown above, 6 of the 9 momentum sector ETFs are outperforming their cap-weighted peers so far in 2015.  The margin of outperformance in Technology, Energy, Healthcare, and Consumer Staples is particularly large so far this year.

The number of holdings in each of the indexes and current market value for each is shown in the table below:

hldgs Momentum on the Sector Level

More information about each of these ETFs can be found at PowerShares.com.

The information found on Dorsey, Wright & Associates’ Web Pages has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any recommendation (express or implied) or information in this report without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. However, such information has not been verified by Dorsey, Wright and Associates, LLC (DWA) or the information provider and DWA and the information providers make no representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein.  Neither the information nor any opinion expressed shall constitute an offer to sell or a solicitation or an offer to buy any securities or commodities mentioned herein. This report or chart does not purport to be a complete description of the securities or commodities, market or developments to which reference is made. There may be instances when fundamental, technical, and quantitative opinions may not be in concert.  Each investor should carefully consider the investment objectives, risks and expenses of any Exchange-Traded Fund (“ETF”) prior to investing. Before investing in an ETF investors should obtain and carefully read the relevant prospectus and documents the issuer has filed with the SEC.  To obtain more complete information about the product the documents are publicly available for free via EDGAR on the SEC website (http://www.sec.gov).  Dorsey Wright is the index provider for suite of PowerShares DWA Momentum ETFs.

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Podcast: Trying to Have It All

May 20, 2015

Podcast: Trying to Have It All

Andy Hyer & Chris Moyer

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High RS Diffusion Index

May 20, 2015

The chart below measures the percentage of high relative strength stocks that are trading above their 50-day moving average (universe of mid and large cap stocks.)  As of 5/19/15.

diffusion1 High RS Diffusion Index

The 10-day moving average of this indicator is 59% and the one-day reading is 72%.

This example is presented for illustrative purposes only and does not represent a past recommendation.  The performance above is based on pure price returns, not inclusive of dividends or all transaction costs.   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 Chart of The Day

May 20, 2015

SPYVSGCC zpsbbvl1uur 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.

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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Daily DWA Indexes Wrap

May 19, 2015

As of the close, 2/10/15:

perf11 Daily DWA Indexes Wrap

Source: Yahoo! Finance

See www.powershares.com, www.ftportfolios.com, and www.arrowshares.com for more information.

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.  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 post.  It is for the general information of readers of this blog.  This post 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 post, investors should consider whether the security or strategy in question is suitable for their particular circumstances and, if necessary, seek professional advice.  Dorsey Wright & Associates is the index provider for the above ETFs.

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RS Chart of The Day

May 19, 2015

spyvsiyr zpstmzjh0nv 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.

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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Morning Mutual Fund Wrap

May 19, 2015

5/18/15 performance of mutual funds for which Dorsey Wright provides models or research:

mutual fund Morning Mutual Fund Wrap

Source: Yahoo! Finance

The performance numbers above are based on NAV returns, as reported by Yahoo! Finance. Past performance is not indicative of future results. Potential for profits is accompanied by possibility of loss. There is no relationship between Dorsey Wright and the mutual fund provider other than a license by Dorsey Wright to the mutual fund provider of certain Dorsey Wright trademarks and trade names, and the Dorsey Wright research (“Research”). The Research has been created and developed by Dorsey Wright without regard to and independently of the mutual fund provider, its business, its development of this product, and/or any prospective investor. The licensing of any Research to the mutual fund provider is not an offer to purchase or sell, or a solicitation or an offer to buy any securities. A determination that any portion of an investor’s portfolio should be devoted to any product developed by the mutual fund provider is a determination made solely by the investment advisor serving the investor or the investor himself, not Dorsey, Wright or the mutual fund provider. Investors should carefully consider the investment objectives, risks, charges, and expenses of any mutual fund before investing. The prospectus and summary prospectus documents contain this and other information about the Fund. You should read the prospectus and/or summary prospectus carefully before you invest or send money. Not insured by FDIC/NCUSIF or any federal government agency. No bank guarantee. Not a deposit. May lose value. Virtus mutual funds distributed by VP Distributors, LLC, member FINRA and subsidiary of Virtus Investment Partners, Inc. Arrow Funds are distributed by Archer Distributors, LLC (member FINRA).

For information regarding the Virtus Funds, please contact your financial representative, call 1-800-243-4361, or visit www.virtus.com to obtain a current prospectus and/or summary prospectus.

For information regarding the ArrowFunds, please call 1-877-277-6933 or visit www.arrowfunds.com.

 

 

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