Harlyn Research provides some alternate analysis, to the Empirical Research work, that looks at the tech sector’s price momentum. The pretext being that sector analysis and strategy is of little use when the most important question for global investors is whether US equities, and particularly the tech sector, can continue its relentless march higher. Perhaps the better way to assess their forward price momentum, says Harlyn, is to treat them purely as securities as opposed to companies or industries. According to Harlyn’s proprietary model (PRATER), the probability of Apple beating the return of the US index on a risk-adjusted basis is 100%, while the equivalent number is 98% for Microsoft. To get a sense of whether momentum is set to accelerate, or decelerate, Harlyn has incorporated a new approach that compares acceleration (in the form of a weekly RSI) with probability (which is equivalent to speed), and tries to identify which stocks are accelerating too hard, given their speed/ position in the road. What their results find is that Microsoft had an RSI which is 2.1 standard deviations (STD) above where it should be, while Apple had a 0.9 STD above its predicted value, having peaked at 2.3 STD two weeks ago. What might this tell investors? Well, Harlyn looked at these metrics across the entire US large cap market and found that there were only seven other stocks which had simultaneously achieved a PRATER of more than 99%, an RSI over 80% and more than a 1.0 STD above its predicted value. In all but one of these cases, the stocks declined by at least 15% on a relative basis over the next 2-3 months. Therefore, Harlyn suggests, it is highly likely that Apple and Microsoft will start to underperform US Equities in the near future and if that’s right, US equities themselves will probably fall.