November 2015 System Quality Number® Report The SQN® Report by Van K. Tharp, Ph.D.

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November 2015 System Quality Number^® Report
The SQN^® Report

by Van K. Tharp, Ph.D.

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There are numerous ETFs that now track everything from countries, commodities, currencies and stock market indices to individual market sectors. ETFs provide a wonderfully easy way to discover what’s happening in the world markets. Consequently, I now apply a version of my System Quality Number^® (SQN®) score to measure the relative performance of numerous markets in a world model.

The Market SQN score uses the daily percent change for input over a 100-day period. Typically, a Market SQN score over 1.47 is strongly bullish and a score below -0.7 is very weak. The following color codes help communicate the strengths and weaknesses of the ETFs in this report:

Dark Green: ETFs with very strong SQN^® 100 scores > 1.47
Light Green: ETFs with strong SQN 100 scores (0.70 to 1.47).
Yellow: ETFs with slightly positive Market SQN scores (0 to 0.70). These are Neutral/Sideways
Brown: ETFs with slightly negative Market SQN scores (0 to -0.7).
Red: Very weak ETFs that earn negative Market SQN scores (< -0.7).

This is basically the same ratings that we use for the Market SQN^® Score. The world market model spreadsheet report below contains most currently available ETFs; including inverse funds, but excluding leveraged funds. In short, it covers the geographic world, the major asset classes, the equity market segments, the industrial sectors and the major currencies.

World Market Summary – Equities & Currencies

Each month, we look at the equities markets across the globe by segment, region and sector. Once again the world is mostly brown and yellow. Part of this global weakness, however, might be due to the rise in the US Dollar which would cause the rest of the world so seem to be going down (i.e., as their currencies depreciate).

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This month the US equity market segments are 60% yellow and 40% brown which corresponds to the sideways quiet market type mentioned in the market update article above. The other Americas equity markets are red except for Mexico and Canada which are brown.

Asia looks stronger than last month but everything is yellow or brown except Singapore which is red. China, Japan, South Korea, and India are the strongest Asian countries being yellow.

Europe tells the same story. Everything is brown — except for three countries — Austria, Belgium, and France which are all yellow. But nothing in Europe is showing extreme weakness even in the face of a strong US Dollar.

The US Sector view shows all yellow and brown industry sectors with two major exceptions — Metals & Mining which is red and Semiconductors which are light green. With a strong dollar, US sectors should be doing well.

In currencies, three are yellow, four are red and the rest are brown. The US Dollar has the highest score of 0.62, followed by the Currency Harvest ETF and then the Euro. The weakest currencies are the Swiss Franc, the Brazilian Real, the Canadian Dollar, and the Yuan. The IMF will give the Yuan reserve currency status in 2016 which could have long term bearish implications for the US Dollar.

Commodities, Real Estate, Debt, Top and Bottom Lists

The next chart shows real estate, debt instruments, commodities, the top and bottom Market SQN scores ETFs for the entire database over the last 100 days.

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Commodities are mostly red with a few exceptions — Timber and Global Water are yellow while Silver is brown.

U.S. real estate is still yellow, while Chinese real estate is brown. So many Chinese invested in real estate and thought it could only go up so the score shows how bad the situation is in China - though it may have started to trend up now.

Debt was mostly light green last month but now it is mostly yellow. 1-3 year US bonds and inflation protected bonds have both turned brown which perhaps indicates that the market is expecting higher interest rates soon.

The top four ETFs in the database are now dark green – and they are mainly municipal bond ETFs. Munis dominate the top ETFs list including the light green scores. We now have one ETF over +2.0 — PGF — and 12 of them are over 1.01.

The bottom list also includes four ETFs with Market SQN scores below -2.0 as compared with five last month. The bottom 15 are all red which means they are at or below -1.5.

Summary

Now let’s look at the summary table which measures the percentage of ETFs in each of the strength categories.

Date	Very Bullish	Bullish	Neutral	Bearish	Very Bearish
2013	> 1.5	0.75 - 1.5	0 - 0.75	0 - -0.7	< - 0.7
Jan 31st,	27.1%	39.6%	20.7%	6.4%	4.7%
Feb 28th	10.3%	45.2%	24.4%	11.9%	7.5%
Mar 31st	39.2%	25.5%	19.1%	9.0%	6.4%
Apr 30th	49.1%	21.1%	14.8%	8.0%	6.2%
May 31st	29.2%	23.6%	19.9%	12.3%	14.2%
Jun 30th	2.1%	31.0%	23.2%	22.0%	20.9%
Jul 31st	8.2%	33.5%	29.0%	13.3%	15.2%
Aug 30th	1%	15%	46.4%	19.3%	17.5%
Sep 30th	1%	13.8%	42.3%	23.0%	19.1%
Nov 1st	13.3%	48.3%	21.8%	12.5%	3.3%
Dec 1st	14.6%	42.7%	24.2%	13.3%	4.3%
Dec 31st	19.3.%	45.5%	22.0%	11.3%	2.9%
2014
Jan 31st	8.0%	49.3%	20.7%	12.7%	7.6%
Feb 28th	18.9%	48.4%	18.1%	6.2%	6.8%
Mar 31st	4.9%	40.2%	38.8%	13.3%	3.1%
Apr 30th	11.1%	33.9%	40.2%	11.3%	1.8%
May 31st	12.5%	46.5%	27.7%	7.6%	6.0%
Jun 30th	53.4%	33.7%	14.2%	2.5%	0.8%
Aug 29th	20.3%	45.2%	22.8%	10.5%	5.3%
Sep 30th	6.6%	26.9%	30.2%	24.0%	18.5%
Oct 31st	2.9%	17.9%	38.8%	17.7%	26.3%
Nov 30th	3.1%	25.7%	25.1%	22.8%	27.9%
Dec 31st	3.7%	29.2%	24.8%	15.6%	31.2%
2015
Jan 31st	7.2%	9.4%	35.1%	25.5%	27.3%
Feb 28th	6.4%	41.1%	34.5%	11.5%	10.9%
Mar 31st	2.3%	24.0%	46.4%	19.7%	12.9%
April 30th	1.6%	13.6%	69.4%	15.0%	5.7%
June 30th	1.4%	15.8%	48.5%	29.0%	10.7%
July 30th	0%	7.2%	49.7%	39.0%	9.4%
Aug 31st	0%	0.4%	7.6%	49.7%	42.3%
Sept 30th	0%	2.7%	7.6%	42.7%	39.8%
Oct 31st	1%	6.0%	19.5%	51.3%	22.2%
Nov 30th	0.8%	3.1%	38.0%	42.1%	16.0%

Three months ago 92% of the ETFs we track are either in bear territory or strong bear territory. That number is now down to 58% — in spite of the strong dollar. This is, however, not enough of a reason to get optimistic - we had a bear market type last month and this month we are only in a neutral quiet market type.

Be careful to base your actions upon what is happening, not what you think might happen.

Until the December SQN Report this is Van Tharp.

The markets always offer opportunities, but to capture those opportunities, you MUST know what you are doing. If you want to trade these markets, you need to approach them as a trader, not a long-term investor. We’d like to help you learn how to trade professionally because trying to navigate the markets without an education is hazardous to your wealth. All the beliefs given in this update are my own. Though I find them useful, you may not. You can only trade your own beliefs about the markets.

November 2015 System Quality Number® Report The SQN® Report by Van K. Tharp, Ph.D.

November 2015 System Quality Number® Report The SQN® Report by Van K. Tharp, Ph.D.

November 2015 System Quality Number® Report The SQN® Report by Van K. Tharp, Ph.D. :: Comments