WHERE WE ARE TODAY

Current Global Relative Strength Conditions

Let's discuss the current state of global relative strength asset categories.

UPDATED 06.18.24

Six Major Asset Categories

Ranked in order of Relative Strength:

  • 1. Domestic Equities

  • 2. Commodities ↑

  • 3. International Equities ↓

  • 4. Cash

  • 5. Currencies

  • 6. Fixed Income

#1 Domestic Equities (U.S. Stock Market)

Domestic Equities are ranked #1 (out of the 6 major asset categories) in terms of long-term Relative Strength.

The table below shows the performance of the 11 major sectors of this asset category.

Technology (RSPT) leads the Domestic Equities asset category with a one-month price performance of 4.01%.

On a long-term Relative Strength basis (highlighted), Technology (RSPT) is the strongest sector followed by Industrials (RSPN).

#2 Commodities

Commodities is now ranked #2 (out of the 6 major asset categories) in terms of long-term Relative Strength.

The table below shows the performance of the 4 major sectors of this asset category.

Agriculture (DBA) leads the Commodities asset category with a one-month price performance of 6.32%.

Highlighted are the top 2 strongest sectors in terms of long-term Relative Strength, Industrial Metals (DBB) followed by Precious Metals (DBP).

WHAT YOU NEED TO KNOW

The Importance of Relative Strength Investing

Our focus is on Relative Strength. RS studies are the cornerstone of Avalon's investment approach. In the above section, we alert you to the top 2 strongest asset categories in terms of Relative Strength.

When most financial media and investment advisors or analysts describe "the strongest" groups, in terms of price performance, they traditionally speak in terms of "comparative performance." This simply means they're comparing the gains over a certain timeframe (such as 1-month, 6-months, 12-months). There is a start date and an end date and depending on which dates are used, the picture can be skewed.

This method can lead to big mistakes, but it's easiest to explain this in soundbites to investors and viewers who aren't interested in learning about Relative Strength. But viewing price performance in terms of RS is a much more effective way to find the true leaders and to find the likely leaders of the near future.

Therefore, our tables are organized in terms of 1-month performance (the traditional "comparative performance" way of reporting price strength that most folks are used to). And we then highlight, in yellow, the groups that are strongest in terms of Relative Strength – the more sophisticated and more effective way of recognizing the current and likely near-future winners.

The groups highlighted in yellow are where we are focusing most of our clients' investments.

We highlight the top 2 (of 6) strongest asset categories in terms of Relative Strength and then we highlight the top 2 strongest sectors within those asset categories, in terms of Relative Strength.

THE FUTURE OF WEALTH

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