"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 19 hours Why Criminals' Cryptocurrency Choices Matter To Average Investors
  • 2 days OPEC ‘Supergroup’ Keeps Oil Exports Subdued
  • 2 days One Belt, One Road, One Direction for Precious Metals
  • 2 days Vicious Trio Keeps Bitcoin in Chokehold
  • 2 days How Infrastructure Is Driving A Commodity Boom
  • 2 days What’s Really Happening With Venezuela’s “El Petro?”
  • 2 days Gold Bull and Bear Markets
  • 3 days 5 Big Drivers of Higher Inflation Rates Ahead
  • 3 days U.S. And China To Face Off Over Aramco IPO
  • 3 days Gold Bulls, Brace Yourselves – Fed Hikes Are Coming!
  • 3 days Stocks Fail to Hold Gains, But Still No Correction
  • 3 days Cryptojacking: A New Threat Vector To Critical Infrastructure
  • 4 days Why The Next Oil Boom Will Be Fueled By Blockchain
  • 4 days 5 Things Investors Should Know About China this New Year
  • 4 days Is The South Korean Crypto-Drama Finally Over?
  • 4 days Miners’ Rally? What Rally? Watch Out for More Fake Moves!
  • 4 days Four Percent 10-year Note Yield Will Be a Floor Not a Ceiling
  • 4 days The End Is Near
  • 5 days 5 Record Breaking Gemstones Even Billionaires Can’t Buy
  • 5 days Irredeemable Currency De-tooths Savers
U.S. Dollar Bull and Bear Markets

U.S. Dollar Bull and Bear Markets

The idea of endlessly repeated…

Irredeemable Currency De-tooths Savers

Irredeemable Currency De-tooths Savers

An irredeemable currency system traps…

The End Is Near

The End Is Near

The doomsayers have been calling…

Relative Strength Indicator: Points to Market Top

Figure 1 is a weekly chart of the SP500. The indicator in the lower panel is a composite that looks at the relative strength of the 9 SP500 sectors: Materials, Consumer Discretionary, Consumer Staples, Energy, Financials, Healthcare, Industrials, Technology and Utilities. The indicator has been smoothed with a 39 week exponential moving average. When looking at the data, which goes back to 2001, we note how effective the indicator was at identifying intermediate term market tops. In other words if an investor was patient, they could get better entry points.

Figure 1. Relative Strength Indicator
Relative Strength Indicator Chart

The indicator remains at a high value and in the zone where past intermediate term market tops have occurred. As discussed in this article, buying at this juncture with the indicator in this position was a losing strategy overall, but for the more nimble trader, prices did move up and down enough to catch modest point moves. The buy and sell signals from that strategy are noted on the chart above. As it turns out, the indicator entered the extreme zone 13 weeks ago. The average length of time that the indicator spends in the extreme zone before rolling over is 13 weeks. Of the 6 occurrences over the past 13 years, the longest trade or occurrence in the extreme zone lasted 21 weeks.

Our relative strength indicator remains consistent with a market top, and the indicator still continues to act within the realm of prior instances when it was extreme. Once again, we are closer to the end of this rally than the beginning.


Want more TacticalBeta? See our pricing chart and upgrade today. Get Started Now


Back to homepage

Leave a comment

Leave a comment

Don't Miss A Single Story