Trendrating – a Swiss company providing advanced analytic solutions for active investment managers across the globe – will begin sharing monthly research results from our price trend analytics engine to help provide some guidance for advisors and other investors. We are in unprecedented times as to economic, market and health disruptions in our world. We feel, now more than ever, that we need a more dynamic risk management mindset.
In order to implement this more modern approach to volatile markets, we need to utilize technology to capture price trends in order to be successful investors in any market environment. We are happy to share this data and welcome your comments and further inquiry
– Rocco Pellegrinelli, CEO of Trendrating
May Sector Allocations
Methodology
To arrive at our monthly Sector Allocations, we delineate the S&P 500 universe of stocks into five groups based on their Smart Momentum Score (SMS). Any stock that has retraced at least 20% from a trend high is considered an outlier. The sector allocation is then found by looking at the proportion of names within quantile one for each sector. To control risk, no sector can represent more than double its weighting in the index.
Suggested Allocations
The companies and sectors that have held up the best over the last couple months remain most favourable. The Consumer Staples sector has the largest overweight, followed by Health Care, Communication Services and Real Estate. In contrast, Technology is now the largest underweight, followed by Financial, Industrials, Utilities, Energy and Consumer Discretionary. Our Model is neutral on Materials, which has a deviation of less than +/- 2% from the index weighting.
Top Trending Stocks in the S&P 500
Methodology
Each month we distribute the Trendrating 100 list to our clients. We delineate the S&P 500 universe of stocks into five groups based on their Smart Momentum Score (SMS) and retracement value. Any stock that has retraced over 13% from a trend high is considered an outlier. This leaves us with a list of names in which our Model has high conviction. The market environment will dictate the number of names in the Top 100 list, but it will typically range from 80-100 companies. Here will be highlighting the Top 25 companies each month. Contact Trendrating for the complete list.
Practical Use Cases
Trendrating adds additional market intelligence that complements most investment approaches. The list can be used on its own or paired with fundamental research and analyst opinions to construct and monitor portfolios. We do not expect excessive turnover of these names from month to month. We have also listed the sectors in accordance with the GICS classification.
Trendrating Terminology
Rating Grade: A = Strong Bull Trend / B = Emerging Bull Trend / C = Emerging Bear Trend / D = Strong Bear Trend
Smart Momentum Score (SMS): is a continuous rating scale between -3 and 3, measuring the strength of the trend since that trend began. The metric allows the model to differentiate between securities of the same ratings, whether that is an A, B, C or D rated security.
Retracement: The percentage off the peak of the trend for positive trends or off the bottom for negative trends.
Additional Information
Proven Effectiveness – A 20-year back test supporting Trendrating’s sector allocation approach
Trendrating Brochure – An overview of the services we offer
Pinnacle Trendrating Innovative Equity Fund (IPTRX) – A mutual fund utilizing our trend capture model
Disclaimer:
ANY AND ALL INFORMATION PROVIDED BY TRENDRATING OR DERIVED FROM TRENDRATING’S DATA IS PROVIDED “AS IS” AND TRENDRATING MAKES NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Trendrating has no affiliation with any company mentioned in this report.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Source: Nasdaq, Inc.