Secretary Kerry says it will be an “unbelievably small” war but that may be enough to keep the Fed printing an unbelievably large amount of money for our markets to absorb. Traders partied on with the S&P 500 gaining 1% and the ETFG QE10 gaining almost 2% for the day. The SPDR S&P China Fund (GXC) is a constituent in both of our smart beta indices and was up 2% yesterday, more than 7% over the past week and more than 12% since it earned the 10 Green Diamond Reward Rating on July 12th. It gets that distinction today for the 24th time since then. This is no fading star as it also holds Quant’s 1st place and dominates the Diamond model to such an extent that we have no 9s again today.
That big rally over the last 8 weeks will pad our performance numbers but does not help GXC’s Fundamental Score which has come down from the high 90s last month to 89.5 today. That is still best among all of the 730 equity ETFs getting scored. Its technical score has risen with its mountain chart, up to 70.6 from the high 50s at the late June low. Sentiment has been volatile ranging from the 30s to the 70s recently and comes in at 63.4 today. That mountain chart was a black diamond ski slope in the first half when GXC sustained a 20% decline, so pay attention to its above average 5.44 Red Diamond Risk Rating driven by a high 8.08 Deviation score. It still trades below its early year high and lower still than a double top formed in April 2011. The fund’s 213 constituents are 91% exposed to the Hong Kong dollar with more than 8% in US ADRs. If you have trouble following its benchmark S&P China BMI Index, it closely tracks the widely published Hang Sang Index. Fund flows have been mostly negative over recent weeks but the price jump in recent days is turning its 5 day flow curve towards the positive side.
GXC is just one of the emerging markets funds that have been scoring and performing well since that late June low. Conventional wisdom then was to avoid the emerging markets in front of the Fed’s tapering but if you follow our models, you know that ETFG provides anything but conventional wisdom. Thanks for checking into ETF Global® Daily Perspectives.