2018issue C0322-27
Rotating international sleeves on relative-strength cycles
International listed products were described as cycling in and out of favor, with relative-strength analysis used to mark those trend changes. Leadership was treated as a multi-year cycle, while shorter counter-moves were inspected on weekly charts rather than taken as automatic regime changes.
- International listed products ranked stronger than domestic ones from mid-2002 through October 2008, then that ranking reversed from late 2009 through late 2016.
- Relative-strength leadership was treated as a multi-year relative-performance-cycle, and smaller counter-moves were inspected on weekly charts instead of being treated as automatic regime changes.
- A satellite international sleeve was added to a domestic market benchmark only after it first led on relative strength.
- A broad total-market product was left out of the international comparison because it already contained domestic holdings.
Leadership that lasted years
International listed products were described as cycling in and out of favor. Relative-strength analysis was used to mark those trend changes.
From mid-2002 through October 2008, international listed products ranked stronger than domestic ones. From late 2009 through late 2016, that ranking reversed.
The case treated relative-strength leadership between those sleeves as typically lasting years, with only smaller counter-moves inside the longer cycle. That long stretch, in which one geographic sleeve stayed stronger than the other, is a relative-performance-cycle.
What weekly charts were asked to confirm
In this archive usage, the relative-strength-index is a lookback ranking of ordered price paths that compares one sleeve with another over a defined sampling interval. That ranking, not a short swing, was what marked the longer cycle.
Shorter counter-moves inside the cycle were inspected on weekly charts with technical indicators. They were not treated as automatic multi-year regime changes.
Editorial: that shorter weekly checkpoint is a confirmation-window. It tests whether a long-running relative-strength ranking is still intact. It does not replace the multi-year ranking with a new regime every time the weekly path dips.
What was left out of the comparison
A broad total-market product was left out of the international comparison because it already contained domestic holdings. Mixing the two sleeves inside one listed product would have blurred the ranking the case was trying to read.
During a five-year window when international holdings lagged, the domestic stocks inside that blended total-market product were described as the reason it outpaced the international set.
When a sleeve became eligible
The construction rule added an international sleeve to a domestic market benchmark only after that sleeve began to show higher relative performance. That rule is sleeve-eligibility: a satellite sleeve is added only after it first leads on relative strength.
Until that lead appeared, the domestic market benchmark stayed the core holding. The international sleeve was not treated as a permanent satellite.
All readings on this track · 7 readings
- 1998Evaluating a binary relative-strength allocation
- 1999Rank-based sector-fund rotation with cash
- 2017Classroom rotation across a short factor-ETF menu
- 2017Evaluating momentum ETF rotation engines
- 2018Rotating international sleeves on relative-strength cycles
- 2019Rank-based sector rotation failed a late-2018 defensive-shift test
- 2020A five-phase compass for sector rotation and book context