Read the recent article about Caliber and Affinity in Modern Trader magazine.
NYSE Update For The Week Of August 22nd, 2016
The Caliber of the NYSE fell last week from 758 to 736. This number means that over the last 60 trading days the NYSE behaved as if it was made up of 736 completely independent stocks, after individual stock trends were removed. The current Caliber is greater than 93% of all Calibers over the last 25 years. Higher Calibers sometimes coincided with better market conditions in the past but this might not be the case in the future.
The correlation between a stock's return and it's Affinity has been rising over the last month as the following graph suggests. Since this correlation is rising, investors might want to look for stocks that have higher Affinity rankings. On the other hand, if this correlation was falling, investors could consider stocks with lower Affinity rankings. In general, the market appears to oscillate between favoring high or low Affinity stocks and the correlation tells you where the market is in that cycle. The overall market can rise or fall for any value of this correlation but the periods when this correlation is rising might be the most comfortable for investors.