The following financial analysis excerpts are from research revisions recently completed on investment portfolios:
**Analysis 3: From D8 (Global) Financial Portfolio Research Revision**
Chicago Mercantile Exchange (CME) vs. NYSE Euronext (NYX):
*Observation – Relative Strength: Results in the relative strength analysis of Chicago Mercantile Exchange (CME) versus NYSE Euronext (NYX) indicate that the CME is strongly outperforming NYX on a relative basis. However, like NDAQ vs. NYX, the CME also has a negative price path. Thus, in this analysis, for the relative strength to be positive, the CME must have a less negative price path relative to the path for NYX.
*Observation – Regression: Comparison of the linear regression to the time-series that has a 3-period forward shift finds the following formation: The linear regression is below the time-series. Since the linear regression provides the “best fit” to the price path, this has negative implications for CME.
*Observation – Price Performance: Chicago Mercantile Exchange (CME) shows the continuation of a negative price path (downward slope) on strong indicators.
[Reference Charts - SCR: D8-17 (relative strength); A8-17A (regression); A8-17B (price)]
**Analysis 4: From D8 (Global) Financial Portfolio Research Revision**
PowerShares Intl Listed Private Equity (PFP) vs. SPDR Capital Markets (KCE):
*Observation – Relative Strength: Results in the relative strength analysis of PowerShares Intl Listed Private Equity (PFP) versus SPDR Capital Markets (KCE) indicate that the PFP is strongly outperforming KCE on a relative basis. However, and like the financials in general, PFP has a negative price path.
*Observation – Regression: Comparison of the linear regression to the time-series that has a 3-period forward shift finds the following formation: The linear regression is slightly above the time-series. Since the linear regression provides the “best fit” to the price path, this has slightly positive implications for PFP.
*Observation – Price Performance: PowerShares Intl Listed Private Equity (PFP) shows a continuation of a negative price path (downward slope) but on weak indicators. For right now, and certainly subject to change, investors are placing more faith in private equity than in the overall financial sector.
[Reference Charts - SCR: D8-21 (relative strength); A8-21A (regression); A8-21B (price)]
For most investors, a diversified portfolio approach combining stocks, bonds, money market securities, etc., is optimal. While diversification cannot protect against a loss from a declining market, it can reduce the overall portfolio’s volatility.
Finally, to the above analysis, the usual disclaimers apply. Since all Strategic Capital Research publications provide research that is conducted using historical data, a reminder needs to be made that the analysis of past market reactions cannot predict future market actions. In particular, no amount of historical data can predict the sudden changes that occasionally occur in financial markets. |
