Alpha.US.Indices – S&P 500 set to outperform Dow 30

There is nothing that validates performance cycles more than trying it on highly correlated assets. We have done it on prior occasions illustrating the S&P 500 and Dow pair, a tight pair. Since 15 July 2009 S&P 500 has underperformed the Dow 30 delivering 5% on an absolute basis and 10% on an annualized basis. This might be low returns, but for the levels of risk this is one workable strategy. Now we are heading into a reversal soon with Long S&P 500 – Short Dow strategy. The latest Alpha.US gives some cues regarding what to expect from the market direction. Energy, transports, financials and the broad market are potential outperformers for the quarter ahead. When a broad market (S&P 500) is a potential outperformer one could rule out any immediate negativity on Dow. Second; according to the Sam Stovall, Global strategist Standard and Poor, sector rotation model, financials, energy and transportation potential outperformance places us in late economic or early economic market cycle stage. This does not look off mark, if we assume that the economy started growing or the economic cycle started in Mar 2009.

The latest Alpha.US carries sector performance cycles for Dow sector Indices. We have illustrated numeric ranking for the respective sectors. Technology is the best sell being at the top of the performance ranking and financials at the bottom are valuable. The idea of performance cycles is very simple. A top outperformer can not remain at the top despite all wishful thinking and a top underperformer can’t remain in the rut even with all the odds piled against it. Hence the perfect time to get into an asset is when it is reeling at the bottom of the rankings and best time to get out of an asset is when its the best and at the top.

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ALPHA is a pair trading, long only – short only strategy and numeric ranking product based on TIME fractals. Time arbitrage, Time Triads, Time fractals are terms coined by Orpheus Research. The signals are carried over three different time frames viz. sub minor (2-3 days), minor (10-30 days) and intermediate (above 30 days). This is a daily signal product. The signals will be illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. This is a part of the time triads analytics developed by Orpheus Research.

Coverage: DOW Sector Indices  (Energy, Utilities,  Transports, Financials, Consumer Goods, Conumer Services, Technology, Telecom) and S&P500.

Please feel free to mail us for any clarifications. *This is a strategy product. Long Short strategies are not riskless strategies. Please mail us for a detailed working or consult a local financial risk manager to execute these pairs. For more details please subscribe to the ORPHEUS TIME ANALYTICS research products.

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