Of the major Dow indexes, the Utilities are often considered the red-headed stepchild. Throughout the evolution of Dow Theory, nearly all attention has focused on the relationship between the Industrials and Transports. Over the years, however, the importance of the Utilities as a leading indicator has been examined, and some of the results are striking.
Every year the Market Technician's Association (MTA), the most prominent organization in the field of technical analysis, provides an annual award for excellence and creativity in technical analysis. This year, the award was given to Charles V. Bilello, CMT, and Michael A. Gayed, CFA, for their paper on beta rotation and the power of the Utilities.
Their phenomenal paper contains a wealth of information, and I'd like to discuss some of the themes that it conveys.
In sum, they have developed a market timing strategy, using the Utilities, that is able to outperform a buy-and-hold strategy throughout various market ... Log in or subscribe to continue reading.
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