The InvesTRAC website diseminates free the results of Investrac's short term comparative performance models in global markets based on technical research honed since 1968. One of the corner stones of the methodology is Comparative or Relatve Performance which measures each component against the others in the model which consists of DJIA, TBOND (30 YEAR), USD INDEX, EURUSD, GOLD, CRUDE OIL AND CRB INDEX. The Score is shown in a table with the strongest on top at +6 and the weakest at the bottom at 0...then beneath the table the performance of the various sectors as measured against the strongest and weakest is shown with 100 being overbought and 0 oversold....click on to the Global Seven tab to view. When the component at +6 gives a sell against another and it causes the strongest to drop to +5 it triggers the first warning to take action....and of course when a component moves from 0 where it is the weakest and moves to +1 we take note.
Comparative or relative performance which measures the price of one market against another is a powerful technique for market students whether using hourly, daily, weekly or monthly data depending on one's time frame. It is not a commonly used technical tool perhaps because it is not that well understood...but to give an example of its recent worth have a look at the daily chart of crude oil below...at the close on September 11 the InvesTRAC model gave a signal that GOLD was going to beat CRUDE...at the time CRUDE was standing at +6 but it dropped to +5 and GOLD advanced to +6...then on September 13 the model triggered a buy EUR sell CRUDE signal dropping CRUDE to +4 with EUR advancing to +5...these two signals are highlighted on the chart below clearly showing that one could have exited longs or shorted crude before the peak in price on September 14. Students of the market can monitor www.investrac.com/global-seven for the advent of the next big signal.
To give you an idea of the value of the Comparative Performance model have a look at it as at Friday November 2 and what the markets did that day:
USD INDEX +6, TBONDS +5, EUR +4, DJIA +3, CRB INDEX +2, GOLD +1, CRUDE 0...USD INDEX strongest ...CRUDE (WTI) still weakest
Take note of the descending order from USD INDEX at +6 to CRUDE OIL at 0 and note at how this order was followed by these sectors in their performance on Friday November 2: USD INDEX +0.66%, TBONDS -0.02%, EUR-0.73%, DJIA -1.06%, CRB INDEX -1.55%, GOLD -2.06%. CRUDE OIL -2.72%
This website must be viewed as a free service for educational purposes but InvesTRAC also provides, for paying subscribers, similar methodology for the ENERGY sector (Brent crude, light crude, gas oil, gasoline, heating oil, natural gas and OSX), FOREX (AUD, BRL, CAD, CHF, CNY, EUR, GBP, HKD, INR, JPY, MXN, NZD, SGD, RUB, ZAR and USD INDEX), METALS (gold, silver, platinum, palladium, copper, XAU and HUI) as well as the 30 Dow stocks (includes DJIA, S&P500, RUSSELL 2000 and NASDAQ). For example if CRUDE were to give a buy signal on the Global Seven model, we look at the ENERGY model to find which of the seven components should behave best...or if the DJIA gives a sell signal, the 30 Dow stocks model will highlight the likely worst performer.