STARPATH
Determines market strength by ranking market neutrality against the moving average distance of 16 correlated market segments.
The STARPATH indicator determines the 'balance of strength' within the market by examining the ebb and flow of strength across multiple market segments. STARPATH combines short and longer-term time-frames, enabling quick reactions to market changes while retaining the ability to follow trends for extended periods. It rates the strength of each market segment daily by comparing shorter-term moving-average performance with longer- term moving-average performance, known as M.A.D. or Moving-Average Distance.
These ratings are ranked and then compared to a value of 1.0 - representing cash or market neutrality. When the number of market segments ranked superior to 1.0 increases, the STARPATH indicator is positive, indicating a shift in the balance of strength towards positivity. Conversely, if the number of market segments ranked above 1.0 decreases, the STARPATH indicator is negative, signifying a shift in the balance of strength towards negativity. If there is no change in the number of market segments ranked above 1.0 on any given day, the STARPATH indicator remains unchanged.
The market segments analyzed by STARPATH are:
- The 9 Styleboxes (LargeCap Growth, SmallCap Value, etc.)
- Dow Jones 30 Industrials
-NASDAQ 100
-Russell 3000
-Consumer Cyclical Sector
-Financials Sector
-Industrials Sector
-Technology Sector
We selected the four equities sectors for their 'pro-cyclical' characteristics as they exhibit tendencies to strengthen and weaken in correlation with the economy and overall market cycles. Sectors such as Utilities, Energy, and Consumer Non-Cyclical, which tend to behave counter-cyclically, have been excluded.
The name STARPATH resonates with the indicator's ability to navigate through various market segments, akin to charting a path among stars, illuminating, and guiding the way through the market's shifting strengths and trends.