Monthly Heat Index

Market Heat Map

Own Trend Leaders, Avoid the Laggards

Dow

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S&P 500

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Nasdaq

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datetime

Style Mix

Bond Mix
Factors
Global
Sectors

MOMENTUM: Which Trend is Your Friend?

Week Month Quarter Year MerlynAI

Trend Quality Drives Performance
Monthly Sector Rotation Strategy Performance
Composed of Six Ordinary SPDR Sector ETFs

Relative Risk

Percent Return

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A Quick Video Tour

Which Trend Friend?

Market Summary:Q2 2022

The S&P 500 declined -9.31% over the second quarter of 2022, adding to the losses of -9.47% during the first quarter. Year-to-date, the S&P has fallen -13.50%. Small-cap stocks gave up slightly less ground than large-cap stocks, and value stocks gave up slightly less ground than growth stocks. 10 of the 11 underlying sectors within the S&P 500 fell for the quarter, with the Consumer Disccretionary, Communications Services, and Technology sectors suffering the deepest drawdowns. Energy was the lone sector that gained during the quarter. Over the second quarter, the Bloomberg U.S.Aggregate Bond Index declined -3.47% while the broader Bloomberg U.S.Universal Bond Index fell -3.55%. Respectively, year-to-date returns for the indexes now stand at -9.11% and -9.30%.

Click to keep chart visible while selecting other trend period buttons for graphic evaluation.

Which Trend is Your Friend?

The Classic 12-Month Simple Moving Average? No!

It would be more than shocking if exactly one year of equal-weighted returns turned out to be the optimum way to measure trends indicative of future performance. But it was simply an experimental choice made by an early academic momentum researcher later copied by others. That choice betrays that they had no knowledge of signal processing theory (that digs signals out of the noise and makes WIFI, digital TV, and remotely controlled rovers on Mars possible).

Can Shorter Trends Respond Faster and Better? No!

They can respond faster, but not better. Sharp drops often snap back, leaving nervous sellers with whipsaw losses when they buy back into the market at a higher price. The common wisdom of “buy the dips” suggests doing the opposite for just this reason. It takes time to safely confirm a trend. See Example Analysis Here

Are Optimum Trend Settings Stable Over Decades? No!

The trend character of the market sometimes changes in reaction to political, economic, and world events. Our Forward-Walk Progressive-Tuning technology automatically adapts the trend measurement settings in response to the market and character of the candidate funds. This Tuning Profile for an ordinary SPDR sector rotation strategy shows how it adapts.

See for Yourself Which Trend is Your Friend

The Market Heat Map page is designed so you can evaluate how each of five different measures of momentum performs in a simple month-end SPDR sector rotation strategy. Here is what to do:

1. Click one of the five choices in the Momentum box.

2. When you hover over the Risk and CAGR values just below, the corresponding strategy chart documenting your momentum selection’s performance appears.

3. Click the Risk or CAGR values to keep the chart up... until you click the chart to close it.

4. With the chart open, click each of the Momentum options to see how they each perform.

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Heat Map, Risk Avoidance, and Portfolio Tools

Market Heat Map

Own Trend Leaders, Avoid the Laggards


A useful market heat map is intuitive, informative, and actionable. The random matrix of boxes typical of most market heat maps is none of these. Although they may be interesting dynamic technographic representations of the market, investors want something more intuitive, informative, and actionable. That is what we deliver.