A technician always has a challenge of coverage. We are trained for speed to spot opportunities. One can look at BSE 30 components, but looking through BSE500 or say RUSSELL 3000 chart by chart is a tough task. The information is growing exponentially like everything else and systems are needed to know where to look.
Orpheus Performance cycles are a novel way to manage a large universe of coverage that works on the idea of mathematical time and cyclical performance. The worst performers should outperform and best performers should underperform.
Today we have matched the best with the worst in the pair grid. The horizontal menu is the top performers and the vertical components are the worst assets. Alpha Global covers 120 assets. This includes commodities, currencies, DOW 30 components, Global Equity Indices and sector representations.
The grid illustrated here suggests that Agro assets are overstretched and extended as the best performers just like a few industrial metals like Tin and Nickel. This week we have Silver also in the top rankers. There are two DOW 30 components DuPont and Caterpillar along with 30 YR US bonds in the list. On the bottom are NGAS and Energy Index from commodities, Shanghai and Nikkei from global Indices and HP, MSFT, Alcoa, Pfizer, JP Morgan and American Express are worst from DOW 30.
How would I use this grid to invest or trade? First: I would look at a trending system to give me sell signal on the best performers. Second: I would look at a similar trending system to give me accumulate or buy signals on the worst rankers. Third: I will use the vest buys and sells to create pair strategies.
Both of NGAS and Energy Index should outperform the Agro and Industrial metals top rankers. Among Global Indices, Shanghai Index and Nikkei should outperform the other global indices. DuPont and Caterpillar should underperform the technology majors HP and Microsoft.
There are also forecasting cues one gets from the grid. JPM, American Express are the best holds. These are financial early economic majors. Early economic outperformance indicates that all equity corrections are not going to lead to a secular bear. The primary trend is a bull after the anticipated intermediate multi week negativity. This reminds us that we should add VIX to the rankings and see if it’s a best buy or best sell and if we are eventually going to some spike down or not.
Mukul Pal, CMT, Orpheus Capitals, Global Alternative Research