Jan 06, 2021
in Sequential RS, Sectors
Relative strength is for segments of the market -- it is not for Growth Stocks or Tech ETFs only, it works for all sorts of things. Below are some value ETF ideas. We have found mixing something like Growth or Value with CORE etfs as well will keep it more mainstream. Up to the user to decide how much deviation from the market indexes they are comfortable with -- below is a starter idea. Note that while many may not equate IBB with value, its simply a fact that the large biotech stocks that are in IBB are also in the value indexes and therefore its more of a 'biotech-pharma' value ETF.
Nov 05, 2020
in Sequential RS, Sectors
Sequential Relative Strength Is Powerful. Rather than always have the same list to go through, it automatically ranks a list and then only uses that sublist to choose from in a 2nd ranking... Keep in mind that over past few years you have still 'lost' money nearly 40% of the time -- so don't think that this is super easy to actually execute. It never seems like that... But keep working at finding good lists and making good entries and over time you will outperform and if you outperform an index that does well, you can do really well.
Aug 29, 2017
in Trend Quadrants, Sectors
Let's look back to 2016 and the market environment in the lead-up to the U.S. presidential election. What were the market conditions telling you?
Is the market moving TOWARD higher-beta, risky, higher-return-but-more-volatile assets? Or is it moving AWAY from those and into lower volatility, lower risk, safer assets? This is what actually matters.
If you take a snapshot of the market 3 months prior to the election, you can see various risky assets in 'Reverse Up' position. That is, their 6-month returns were up while the previous 6 months had been down. We can view this on our ETF Trend Quadrants module (located on the ETF Tools page):
Here is the position 1 month prior to Election Day. Note ETFs here are moving to the right. This represents money flows IN.
And then we align 2 browser windows to show Election Day and 1 month after:
Let's also cross-reference this thesis by looking at the credit markets, High-yield bonds vs Treasuries in ratio moving average form:
From 2014 into early 2016, high-yield bonds had under-performed treasuries materially. But a sharp V-spike reversal occurred in this ratio in early 2016. It was not unreasonable to think a new period of risk-on was possible if not likely given the 2014-16 relative drawdown.
The point of all this is NOT that these ETFs predicted the election. They didn't. The point is that the market conditions were bullish and this was visible in looking at the many intra-market relationships via ETFs. Sometimes the markets will whipsaw around in a tricky trading range -- but often times the markets follow the flows and 2016-17 is a real nice example of this.
Our Twitter feed on November 9, 2016 made this point as well:
