Futures show a rough open today with the S&P 500 looking at another post election low as our beloved politicians return to Washington DC where they will work to avert the fiscal cliff, in theory. Greece is hitting a fiscal wall as a bond refunding didn't go well and their European brethren are getting tired of cutting checks. The Global X FTSE Greece 20 Fund (GREK) dropped 40 positions in Quant’s lower ranks to 502nd place, probably not on many buy lists this morning. The rest of Europe did better in Quant’s overnight equity rankings as many funds have gained positions. The pan European SPDR DJ EURO STOXX 50 Fund (FEZ) gained 37 places into the top 10 at 9th place. Higher sentiment scores reflect the market’s concern about the region’s fiscal imbalances but higher technical scores suggest the smart money is taking advantage of a possible bottom in many of the EU countries. Looking at some of iShares’ individual country funds we see France (EWQ) leading the pack in 2nd place this morning driven by the same contrarian sentiment scores and improving technical scores. Coming down the rankings we see Spain’s EWP in 21st place with middling technical scores, better fundamental scores, and rising sentiment scores. Italy is next where EWI comes in 34th place again on higher sentiment but very weak technical scores. The stronger European economies see their dedicated funds lower in rank but also picking up positions. Switzerland’s EWL picked up one spot to 29th place and its alpine neighbor Austria saw EWO gain 20 positions to 50th place. The Netherlands have their fiscal house in order and EWN gained 24 places to 42nd. Two of Europe’s strongest economies have seen their funds excluded from Quant’s upper ranks in recent months but today Germany and Sweden see their respective EWG and EWD in 69th and 93rd place on higher behavioral scores in both the technical and sentiment categories. While the weaker members of the EU look better in Quant’s ranks, Data Miner has learned to be cautious of high scores driven by the more volatile sentiment measures. Today’s lackluster bond auction could be a catalyst to boost the funds of those stronger economies that are more quietly rising in Quant’s ranks where slow and steady ultimately wins the race. Maybe Europe is finding a fiscal equilibrium or maybe it’s just the cleanest dirty shirt, Quant doesn't necessarily predict gains but it does predict outperformance for these funds over the intermediate term.
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