Mixed Signals on Precious Metals - By: S.C.R. Analysts

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:

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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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

About The SCR Analysts 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 Excerpts: http://www.strategiccapitalresearch.com/research.html [SCR] Matching R&A Strategies: http://www.strategiccapitalresearch.com/strategies.html

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