Location in the relative value cycle (method 2)

This is a complementary method that confirms our position in the cycle

  • Here we briefly look at identifying the phase position using the relative value metric introduced earlier

  • Now we are in the domain of ‘prices’ and not ‘returns’

  • In the chart we see the correlation of today’s relative value compared to past versions, and we see that we almost perfectly replicate April 2003, compared to July 2003 on returns

  • Now as then, relative value is to be found at the ends of the price spectrum, but not in the centre