The StockCharts Technical Rank (SCTR) is tool that separates the cream from the crop.
Quoting from
stockcharts.com:
"In any given SCTR universe, the top 10% will rank between scoring of 90 and 100, while the bottom 10% will rank between the scoring of 0 and 10. 90-100 represent strong strongest scoring, while 0-10 represent weakest scoring. A stock scoring 50 would be average, showing neither relative strength nor relative weakness. In general, scores between 40 and 60 are considered average. Signs of technical weakness start to appear as scores move below 40. Signs of technical strength emerge when scores move above 60."
The below is how to access the SCTR Indicator Reading:
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Detailed educational materials may be found here for your detailed learning
(Do read from here so that I do not need to re-invent the wheel):
Out of the universe of technical analyses, 90% are nonsense, and rubbish at best. However, the SCTR (Stock Charts Technical Rank) is a gem. This is one of my secret fine weapon when classifying which markets to long and which markets to short or at least reduce risk exposure. And I decided to be selfless in revealing one of my methods to do a major macro-filtering -- in seek of the right macros.
Relative Benchmark:
SPDR Dow Global representing Global Mean
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Attached above is the global market performance as a relativity benchmark. It has a scoring of 38.6. This means that we could consider having a stronger tendency to buy or overweight on markets which have a scoring of >38.6.
Next, we can start to search for every individual country for consideration. I have enlisted 28 major markets for consideration and ranked them by their SCTR scorings. The following is the result:
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NASDAQ appeared to have the top score of 86.7 and is the strongest market in the world -- at the strongest performing, most bullish, and most outperforming end of the market strength spectrum. This is followed by S&P 500 with a scoring of 78.9 and DJIA with a scoring of 75.8. Now, it is not difficult to see that US economic growth is the strongest in the world -- in a premier league of its own.
This represents tier one in which we would seek to be overweight and is why I had reiterated countlessly to be overwhelmingly over-skewed (overweight) towards such markets when buying stocks. It is also why my US stock market portfolio (70% are in US market) is the best performing with the NYSE-NASDAQ Top 8 Stocks analysed previously mostly giving good returns and will continue to do so in the next 9mths-12mths. Even those outside the US Top 8 as choices are giving me outperforming returns since January 2018.
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Next comes the 2nd tier above, ranked from 4th to 7th. They are India, Australia, Canada and Switzerland with system scoring of 63.2 to 37.9 in descending order. These are still markets which if you buy stocks, you get profits easily and outperform the global markets greatly. These are countries whose growth are exceedingly strong. They are also considered premier league.
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The next layer, the 3rd tier, are markets on par with global market growth. They still represent good-performing markets for the long term, mid term and short term. They are Mexico, Taiwan, Malaysia and Sweden with a score of 35.1, 31.6, 28.9 and 26.0 respectively.
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Next, we have the 4th tier as above. They are considered under-performing markets and are slightly below average in performance. They are France, Hong Kong, EAFE as one Bloc and the UK. Investors will and should tend to realise by now that switching to more weight in US strong stocks with clear cut uptrend (higher lows higher highs for the past 9 months) will had given them much better performances even under bad case scenario just by using SCTR system.
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In the 5th tier, we start to have lousier markets (weak markets). These are markets in which growth is weak or not that sustaining, and their economies are more fragile in current hawkish macro-economic environment. These are Japan, Holland, Belgium and Singapore, with market SCTR score of 22.8, 19.2, 16.9 and 15.4 respectively.
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In the 6th tier, we have very weak markets whose growth are taking hits. Based on this tier, it is quite glaringly clear that Trump's trade war on especially the high end sectors is taking a toll on these economies. Germany's, Korea's and China's meat seem to be becoming US' meat. In this 6th tier of markets which we would want to seek to avoid, they are Austria, Germany, S.Korea and China. The trend is one's best friend and they are likely to remain weak in growth in 2019 when their meat are eaten by Trump administration -- not that they are unable to grow, but their growth will far under-perform global markets now.
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In the penultimate layer, we have the 7th tier ranking making up of Spain, Emerging Market Bloc, Russia and Italy. They have a score of 9.1, 9.0, 7.0 and 3.8 respectively. They are extremely weak. They are so weak that they may even be considered for shorting on short term strengths to hedge the volatility and protect one's portfolio of longs and investments -- for example when market dips, long US and when markets rebound, short these weakest markets in the macros background.
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On the last final tier, the 8th tier, we have the Brazil markets (and South Africa). Brazil seems a potential to join Venezuela sort of mess or embarrass the BRICS.
Lastly, it does seem that India is the only strong one among the BRICS (South Africa has SCTR score of just 1.0). On another note, notice in the second tier and third tier -- does it coincide with the list of countries proposed by the US to form an Indo-Pacific Partnership with the US? (Such partnerships may actually indeed be formed). These are countries with strong ally-relationship to the US or are starting to re-align again to the US based on my observation of the times.
Note also that US markets of NASDAQ, S&P500 and Dow Jones had consistently and persistently been above the SCTR score of 50. If one had been tracking SCTR periodically, and had determined US markets had been the place to be in (correlation: strongest market reflecting strongest economy), one's trading and investing portfolio performance would generally be outperforming and most rewarding on the macros (after that then apply the micros to select best stocks).
