Thursday, June 10, 2010

Return of Large Cap Dominance?

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I'm not advocating a move to long positions -- hardly.

What I note with interest is that large cap stocks are performing better than small caps in the present market climate, and in a macro-sense, they represent a safer haven than small caps.  Here's a chart for your consideration:



The graph above is constructed using a function within HGSI which allows you to compare two series of numbers -- in this case, Large Cap stocks as represented by the Russell 1000 (IWB) in the numerator, and Small Cap stocks as represented by Russell 2000 (IWM) in the denominator.  When you divide the two you get the choppy line; when you smooth it using a 34d SMA you get the indicated trend line.

The indicated trend line shows a reversal in slope -- it is now pointing upward.  This indicates that large caps are dominating, and when/if I move into the market, I'll start looking at large cap strategies.

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Here is an update on the status of the GGT system, given in a different format.  Please let me know if this is useful by leaving a comment below.  As with all my graphs, right-click on the graph to view in another window or save to disk:



Lots of red.  Tread carefully right now.

Note that database strength increased slightly yesterday, but the LCR continues to fall.  The LCR Change Timer is still in CASH.  Elder's Force Index Timer is still in CASH.  This information is presented above -- make sure you see where this is indicated.

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Remember, you are responsible for your own investment decisions, not me.  Do your homework.

Regards,

pgd