Changes in Global Materials Warrants Watching - By: S.C.R. Analysts

Finance Portfolio Research & Analysis for August 11 – 15, 2008

From our International (excludes the USA) research division and matching International strategy analysts, the following financial analysis excerpts are from revisions recently completed on Internationally based investment portfolios:

SCR Step 1 – Analysis: From No. D5 (Int’l) Financial Portfolio Research Revision –
[iShares (Wgt: MC)] S&P Global Basic Materials (MXI) vs. [iShares (Wgt: MC)] S&P Global 100 with U.S. (IOO):
(1) Observation – Relative Strength: Results in the relative strength analysis of S&P Global Basic Materials (MXI) versus S&P Global 100 with U.S. (IOO) indicate that MXI is underperforming IOO 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 price is below the linear regression, and the linear regression is below the time-series. Since the linear regression provides the “best fit” to the price path, this has near term negative implications for MXI.
(3) Observation – Price Performance: S&P Global Basic Materials (MXI) shows a continuation (that began in May) of a negative price path (downward slope) on fairly strong indicators. The exception is that momentum is dropping; thus, a change in the price path direction could be in the making. Furthermore, the security price shows a (very weak) positive divergence from some of the indicators. This security warrants watching.
[Reference Charts: D5-7 (relative strength); AD5A-5a (regression); AD5B-5b (price)]

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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.

About the Author

The SCR Analysts represent the collective voice of the researchers at Strategic Capital Research (SCR). We provide global financial analyses, and subsequent strategies, from countries to companies. Copyright 2007-2008.
[SCR] Research & Analysis with Free Excerpts at Strategic Capital Research, LLC.

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