From first to worst

Each day that Wall Street is open for business I monitor benchmarks for 18 different markets to gauge relative strength. The results help me to identify pockets of momentum. I posted this same ranking on May 8th and since then the Japan stock market has moved from the top spot all the way down to last place. The Nikkei 225, an index of the largest stocks traded on the Tokyo Exchange, turned on a dime May 22 and has lost 15% of its value in just 8 trading sessions. Of course, the Nikkei 225 was up 50% year-to-date before correcting. As the saying goes: the bigger the pop, the bigger the drop.

                             Markets by Relative Strength

1.  Russell 2000 Index                                10.  International bonds
2.  Nasdaq Composite Index                     11.  US bonds
3.  Nasdaq 100 Index                                  12.  International equities
4.  Dow Industrial Average                        13.  US high yield bonds
5.   S&P 500 Index                                       14.  US municipal bonds
6.  Wilshire 5000 Index                              15.  Gold
7.  US equities                                               16.  Asian equities
8.  European equities                                  17.  Latin American equities
9.  S&P 400 Index                                        18.  Japanese equities

My ranking is derived by applying a proprietary formula which incorporates performance over a variety of time periods, with more weight given to recent price activity. This is just one of many filters I use in determining newsletter model portfolio and managed account client recommendations.

♦ Please note that my readings will change without notice,  so please don’t buy or sell solely based on anything you read in this blog. ♦