Thursday, October 18, 2012

We see some subtle moves in our Quant ranks this morning which may be wiggles or could signal trend changes.  The iShares and SPDR China funds, FXI and GXC, have each sat in the top 5 for more than a month and each rallied nicely again yesterday.  Today they have dropped to 8th place for FXI and 14th for GXC.  Both are still very high ranks but may signal that wave is about to ebb.  FXI sees its Fundamental Score drop from 87.3 to 80.8 overnight; GXC also sees slight drops in its Fundamental Score from 91.1 to 90.4 and its Technical Score from 72.6 to 71.5.  Quant isn’t saying to avoid these funds it’s just saying it now likes others more.  One of those it prefers is the iShares MSCI France Index Fund (EWQ) which has been in the top 10 for most of this month but has not achieved Quant’s top position until today.  If a country trying to ban homework for school kids isn’t your top choice, Quant also still likes Spain where the iShares MSCI Spain Index Fund (EWP) comes in 9th place today.  Still too much for your queasy gut to bear?  Try the more diversified iShares MSCI EAFE Index Fund (EFA) in 5th place today.  The Geographic Exposure chart on its tear sheet shows Great Britain and Japan as its two largest country weights.  

Yesterday we highlighted the three S&P 500 funds all in the top 10, two of them move out of that rarefied space today but remain in the top 25.  They made room for some other US based funds, such as the Vanguard Growth Fund (VUG) in 2nd place, its highest rank since early September.  That was a one day event but the fund remained on the ETFG 100 list for most of the time since then working its way back up today. If you bought it then you haven’t lost anything but you might want to make sure it sticks around the top ranks for a few more days before committing to it.  Other US funds scoring well today are Vanguard’s Information Technology Sector Fund (VGT) and the SPDR Industrial Select Sector Fund (XLI) in 4th and 7th place.  VGT has spent more time around the top ranks recently and gets there today with a high 89.9 Fundamental Score.  That was driven by price declines in constituents such as IBM and Intel its 3rd and 5th top weights respectively.  XLI has been working its way up the ranks gradually and gets into the top 10 for the first time since early August.  It looks like it’s been working on a bearish head and shoulders formation since then but yesterday it rose above that right shoulder.  That move has helped its Technical scores but improving Sentiment scores are most responsible for today’s ranking.  Those are Quant’s more volatile metrics but the fund’s gradually improving ranking over the past month has been mostly driven by improving Technical and Fundamental scores.  XLI is challenging multi year highs and a breakout from such a long consolidation could signal a strong move up and could also signal a move up for the US economy in general.  Growth, Technology and Industrials all moving up, sounds like Quant is looking more favorably on the US economy.  Even the much maligned Dow Transports fund is moving up but we’ll leave that one for another day.  Thanks for reading and please feel free to contact us at for any help with our offerings.

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