About

Definition: an objective, rule-based process that determines what to do and when in the U.S. equity market through a standardized strength measurement method at five levels: market, sector, industry, sub-industry, and stock.

Three unique tools deployed:
1. Market Strength Score (MSS)
2. Sector Strength Terrain Clock (SSTC)
3. Strength Spectrums

Insights provided: where is there strength in the market and how stretched might that strength be.

STRENGTH MEASURED

A Common Problem...

Fact: much market analysis is fragmented.
- Macro commentary reveals the big picture but not what to do with it.
- Stock screeners surface candidates but ignore the conditions surrounding them.
- Sector analysis sits in the middle, consulted selectively and rarely connected to either the market environment above or the trade below.

The resulting problem: subjective, emotionally-tainted, inconsistent decision-making difficult to troubleshoot. Why? Because this framework is based on a collection of disconnected inputs that demand significant interpretive work before producing actionable decisions.

... Solved by Five-Level Strength Analysis

This process eradicates interpretation and related bias and inconsistency by using a logical chain analyzing the market from the top down, inside-out, and the bottom-up, specifically at these levels:

1. Market
   The Market Strength Score described below establishes the prevailing Regime, objectively clarifying where the U.S. equity market stands and how much strength may remain.
2. Sector
   Eleven sectors are scored and ranked by strength, revealing rotation and leadership in real time.
3. Industry
   Industries within each sector are scored independently, exposing pockets of strength and weakness invisible at the sector level alone.
4. Sub-Industry
   Sub-industries within industries are parsed to determine leaders and laggards with even more granularity and refine decisions.
5. Stock
   Individual trade candidates are considered only after strength is determined at the upper levels, using the same analytical methodology so final trades are executed not in a vacuum but in a fully-informed environment backed by objectively measured upper level strength unseen at the individual stock level.

x REGIME DEFINED

Most stocks rise and fall with the market. Selecting individual trades without contemplating current conditions ignores invaluable information, needlessly jeopardizing the return possibilities.

Through the components described below, the Stock Market Organizer Process explicitly defines daily the prevailing market regime based on the same strength analysis applied to the five market levels. This regime definition sets the stage for logically organized trade evaluation and management.

The Market Strength Score (MSS)

The Market Strength Score is a single number between -100% and +100% that quantifies daily the overall strength of the U.S. equity market.

It is an objective and structural assessment of where strength currently resides and how much may remain, derived from the Five-Level Strength Analysis.

The Six Phases

The Six Phases are based on an evaluation of decades of historical market action revealing common characteristics for each phase, carrying specific implications for volatility, directionality, position sizing, and behavior:

1. +1 Bullish New
   High volatility, strong bullish directionality. Biggest gains start here, but early bull moves remain vulnerable to reversal.
2. +2 Bullish Maturing
   Low volatility, strong bullish directionality. The bull move is established. More evidence daily.
3. +3 Bullish Advanced
   Low volatility, mild bullish directionality. Bears hibernating. High optimism. The market can remain irrational longer than you can remain solvent.
4. -1 Bearish New
   Low volatility, mild bearish directionality. The market has started to crack. Bull/bear tug of war.
5. -2 Bearish Maturing
   Mid volatility, bearish directionality. A more established bear move. Buyers may step in at better pricing.
6. -3 Bearish Advanced
   High volatility, strong bearish directionality prone to snapback rallies. Preserve capital, and cash is a position.

Each phase carries a specific allocation framework guiding how aggressively to be positioned long, short, or in cash.

The SMO Sector Strength Terrain Clock (SSTC)

This combines the Market Strength Score and the Six Phases in a snapshot that clearly

1. depicts where every sector and industry currently sits within the Strengthening/Bullish and Weakening/Bearish cycle,
2. condenses the entire market environment (volatility, directional bias, and cycle stage) into a single, actionable phase reading that reveals both which way the market is leaning and how far along it is in that move, and
3. breaks that reading down to the sector and industry level, showing where the strength is concentrated, where it's fading, and where the risk is building.

= TRADES ORGANIZED

The logical last step combines strength analysis and regime definition to organize trade decisions across the following dimensions, each informed by conditions at all five levels:

• Whether conditions support long or short positioning
• Whether to trend-follow or mean-revert
• Whether to be aggressive or conservative
• What holding period is appropriate given the current phase
• Which sectors, industries, and sub-industries have strength worth pursuing
• Which trade candidates align with that strength

The Bottom Line

This equation represents a disciplined, repeatable process for reading the market objectively and acting on that reading.

And, like all multiplications, each factor makes the other more powerful.

For educational purposes only. These are not stock or investment recommendations. See full disclaimer.