For this month, the cycle/relative strength concept is applied. First, the Dow Jones 30 stocks are ranked from the best performer to the worst by calculating the expected return in that month. The top stocks were screened as follows. The best traditional performers in the month were then screened for relative strength by a unique measure that sorts by several relevant time periods. Those that pass both screens are buys for the month. The stocks that are both weak monthly performers and weak relative performers are short sales for the month.
This process has been applied to the Dow Jones 30 stocks by buying the top five rated stocks and by shorting the five lowest rated stocks. From January of 2020, the top five long stocks have risen by an amount about 67% greater than that of the short sales and 35% over the DJIA. The short sales were net negative over that time period at -11%.
Here are the top five long recommendations for this month:
Cisco-CSCO
Salesforce
CRM
Microsoft
MSFT
Boeing
BA
McDonalds-MCD
Here are the top five short recommendations for this month:
Walgreen Boots-WBA
Disney-DIS
Honeywell-HON
Travelers-TRV
Coca Cola-KO
Cisco is the highest-ranked DJIA stock in this month. Note the higher lows in momentum and in relative strength.
Walgreen Boots is the lowest-ranked DJIA stock in this month. Note the new low in relative strength.
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