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Strategies & Market Trends : The coming US dollar crisis
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To: Giordano Bruno who wrote (35526)2/22/2011 10:21:33 PM
From: John5 Recommendations  Read Replies (3) of 71463
 
I enjoy creating and examining various unorthodox indicators to evaluate the relative strength of equities.

One simple indicator that reveals the relative strength of the DJIA is its 5-day mean closing ranks for the year, where 1 represents the highest close out of the previous 5 sessions, and 5 represents the lowest close out of the previous 5 sessions.

The current indicator (for 2011 to date) stands at 1.97. That compares to the mean of the annual values since 1928 of 2.83. During the 1990s the mean was 2.92, and during the 2000s the mean was 2.75.

Obviously, the DJIA has been extremely strong this year, having closed most days during any given 5-day period ranked first. In fact, 21 of the 35 closes this year have been ranked first out of the previous five closes, while only four closes were ranked fifth.

The current indictator strongly suggests that weaker closes are in store. Of course, timing is another matter.

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