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Performance Ranking examples from the S&P 100 Index

September 2, 2013

The following S&P 100 Index components have or are close to meeting the criteria for Performance Ranking (PR) trades. Stocks are shown relative to the S&P 100 Index, with the 14 week RSI of this relative line and the PR of the stock within the 100 index components.

Honeywell (HON)

HONOEXWEEKLY

  • The pair makes a new high with bearish divergences on the 14 week RSI and the PR
  • The September 2011 relative low came with bullish RSI and PR divergences (dashed line)
  • A sell signal is a weekly close of the RSI below the intervening low (blue arrow)

Daily chart

HONOEXDAILY

  • A new high was made on 20 August (purple arrow), with RSI below 70, having already been on a divergence. This matches the daily RSI divergence criteria
  • A move below the 16 July low (blue arrow) will be a two month relative low

A short position in HON v OEX will be opened if two conditions are met:

  • A close for the 14 week RSI below the intervening low
  • At the same time, a close below the low of 16 July

The stop loss will be a new high, 1.8% above the 20 August high.

Exxon (XOM)

XOMOEXWEEKLY

  • The pair makes a new low with bullish divergences on the 14 week RSI and the PR
  • There was a bullish set up in July 2010 and a bearish set up in April 2011 (dashed lines)
  • Note the first doesn’t work immediately (two month delay) and the second peak was temporary, holding for eight months

Daily chart

XOMOEXDAILY

  • There is bullish divergence against the April trough and within this trough, although the daily RSI never got above 30 at the low, as is ideal

3M Company (MMM)

MMMOEXWEEKLY

  • Bearish divergence against the March high is shown on the 14 week RSI and the PR

Time Warner (TWX)

TWXOEX

  • This doesn’t have divergence yet but a new high and the RSI going above 70 would give a good set up.

Also setting up…

These stocks versus the S&P 100 Index have or are close to RSI divergences but their PR divergence is slight. I see pronounced PR divergence as better supporting evidence to an RSI divergence.

Bullish divergence: Exelon Corp (EXC)
Bearish divergence: Boeing (BA), Ford (F)

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