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 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 60% greater than that of the short sales and 28% over the DJIA. The short sales were net negative over that time period at -14%.
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