Mixed Signals on Precious Metals: Finance Portfolio Research & Analysis for August 4 – 8, 2008

From our USA research division and matching USA strategy analysts, the following financial analysis excerpts are from revisions recently completed on USA based investment portfolios:[1]

SCR Step 1 – Analysis: From No. D1 (USA) Financial Portfolio Research Revision –

[PowerShares (Wgt: MC)] Precious Metals-Deutsche Bank (DBP) vs. [SPDR (Wgt: MC)] S&P 500 (SPY):

(1) Observation – Relative Strength: Results in the relative strength analysis of DBP versus SPY indicate that the Precious Metals-Deutsche Bank (DBP) is strongly underperforming S&P 500 (SPY) on a relative basis.

(2) Observation – Regression: Comparison of the linear regression to the time-series that has a 3-period forward shift finds the following formation: The linear regression is below the time-series. Since the linear regression provides the “best fit” to the price path, this has negative implications for DBP.

(3) Observation – Price Performance: DBP shows a continuation of a negative price path (downward slope) on weakening indicators.

[Reference Charts: D1-6 (relative strength); AD1A-6a (regression); AD1B-6b (price)]

SCR Step 2 – Implication & Strategy:

(1) Possible Implication: The summary of the stated observations for DBP is Negative, and has Bearish implications. While some of the indicators are getting weaker, many are still quite strong. If you have a short position on DBP, it might be good idea to tighten your chosen exit stop.

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Second, in consideration of that goal, studying the information available on this site, which has been kind enough to host our research in this article, will help.

At www.StrategicCapitalResearch.com, we provide additional finance educational materials to what you find here in both investment books and videos. Between the two sites, you should be able to find enough information to get started toward achieving your education investment goals.

Third, to the above analysis excerpt, the usual disclaimers apply. Since all Strategic Capital Research publications provide research that is conducted using historical data, a reminder needs to be made that the analysis of past market reactions cannot predict future market actions. In particular, no amount of historical data can predict the sudden changes that occasionally occur in financial markets.

[1] Reference chart numbers beginning with an “A” refer to the auxiliary analyses completed on the “D” portfolios located at www.strategiccapitalresearch.com/research.html