Investing

It’s All About the Board

By Adam O'Dell  |  August 9, 2018

I’ve introduced you to the Leaders & Laggard Board that I’ve shared with my Cycle 9 Alert readers since 2012.

To re-cap:

  • The Leaders & Laggards Board ranks each of the nine U.S. market sectors, from #1 (best) to #9 (worst).
  • To do this, my Cycle 9 algorithm makes two important determinations about each sector:
  • How much momentum is it showing, relative to the broad market, and
  • How much momentum is it showing, relative to its own recent past.
  • Top-ranked sectors are poised to outperform the broad market over the next two to three months, while bottom-ranked sectors are more likely to underperform.

Realize, the yellow-highlighted portion is what makes our Leaders & Laggards Board so valuable to you, as an active investor.

The rankings are forward-looking. That is to say, they have predictive value.

They’re not simply “tallies” of past performance.

The Leaders & Laggards Board is designed to alert you to the next, up-and-coming “hottest” sector.

Proof is in the Pudding

We’re getting ready to celebrate the 5-year anniversary of Cycle 9 Alert!

I think I mentioned that last week… but you can now add your name to the list of pre-approved attendees, for the (no cost) special presentation we’ll be running on August 16.

Suffice it to say, Cycle 9 Alert wouldn’t have lasted this long – let alone had such great success – if my Leaders & Laggards Board wasn’t capable of identifying the market’s next “hottest” sector.

As they say, the proof is in the pudding. (And we’ve enjoyed a lot of sweet pudding over the past five years!).

Anyway, I do still run my Leaders & Laggards Board through the ringer from time to time… just to make sure it’s still working as it’s supposed to.

One of the most interesting tests I’ve ever put it through was what I’ll call the “Trump Test.”

You see, my Cycle 9 Alert algorithm (which drives the Leaders & Laggards Board, and the service’s Trade Alerts)… it doesn’t “read the news,” or factor in any “fundamental” data, like P/E ratios, or economic growth rates.

So, I was of course curious to see how it handled Trump’s “surprise” win.

On February 14, 2017, I wrote to my Cycle 9’ers the following…

It’s been three months since Trump’s early-November election win… the win that “nobody saw coming!” 

The question I’m seeking to answer today is, of course, “did our Cycle 9 Alert algorithm and ranking system ‘see it coming’?”

In short, the answer was: “Yes! Our algorithm ‘saw it coming!’”

That is to say…

  • Top-ranked sectors outperformed in the three months following Trump’s win.
  • Bottom-ranked sectors

Here’s one of the charts I shared with my Cycle 9’ers

U.S. Market Sectors
SectorScoreReturn
Financial (XLF)1.7420.3%
Energy (XLE)1.036.0%
Industrial (XLI)0.7812.8%
Consumer Staples (XLP)0.712.0%
Utilities (XLU)0.331.1%
Consumer Discretionary (XLY)0.259.4%
Materials (XLB)0.0511.3%
Technology (XLK)-1.249.1%
Healthcare (XLV)-1.535.9%
 
“Best-Rank vs Worst-Rank” Return14.4%

 

Heading into election day, the Financial (XLF) sector was ranked #1 on our Leaders & Laggards Board… suggesting it was poised to outperform over the next two to three months.

Turns out… that’s exactly what happened.

The financial sector gained a whopping 20.3% in the three months following Trump’s “surprise” win… outpacing the broad market, and every other sector, quite handily.

Meanwhile, you can see how the Health Care (XLV) sector was ranked #9 on the eve of election day. And while it didn’t go on to earn the absolute lowest return amongst the group, the sector’s returns did lag the broad market and a number of other sectors.

At the end of the day, there was a 14.4% outperformance spread between the #1 ranked financial sector and the #9 ranked health care sector.

In other words, our Leaders & Laggards Board worked exactly as it’s supposed to!

It identified the market’s next “hottest” sector… and alerted us to soon-to-be lagging sectors, as well.

And this was actually the case across the board… not just for the nine U.S. market sectors I track.

For my Cycle 9’ers, I ran the same analysis on a number of other groupings of markets.

I looked at my algorithm’s rankings of U.S. Industry Groups (aka “sub-sectors”)… the top-ranked U.S. industry group outperformed by 7.2%.

Among the top 15 foreign stock markets… the top-ranked market outperformed by 9.8%.

Even among the “alternative” assets classes – bonds, commodities and currencies – my Cycle 9 algorithm’s ranking system correctly sorted the soon-to-be winners from the losers… identifying outperformance of 2.1% among commodities, 2.5% among currencies and outperformance of 5.4% among global bond markets.

The point is…

My Cycle 9 algorithm and ranking system was able to identify poised-to-outperform markets… across all asset classes… even though Trump’s win came as a “surprise” to many!

And if that isn’t a “proof in the pudding” endorsement of the power of our Leaders & Laggards Board, I don’t know what is!

Join Me Next Week…

As I’ve mentioned, we’re celebrating the 5-year anniversary of Cycle 9 Alert with a special presentation.

We’re calling it the Seven Figure Summit, since a “Day One” subscriber to Cycle 9 has had the opportunity – by making each of my actual recommended trades – to turn $50k into “seven figures” ($1.2 million, to be exact)!

The presentation will air next Thursday, August 16.

It’s free. But you do need to put your name on the list, since we’re expecting this to be a high-demand event

I can’t wait and I really hope to “see” you there!