Wednesday, December 19, 2012

NASA says there is no credible evidence that the world will end when we cross to the other side of the galactic alignment in a couple of days.  But will we experience something worse than Y2K?  Will the earth’s magnetic poles reverse, rendering our electrical grid obsolete?   Quant doesn't do astrophysics or electrical engineering but its biggest mover today may be a favorite among the Preppers stocking their bunkers.  The Powershares WilderHill Progressive Energy Portfolio (PUW) gained 341 positions overnight into Quant’s 70th place rank.

Moves like that are usually confined to the lower ranks and are driven by spikes in various sentiment measures.   PUW did see a rise in its Sentiment Score from 41.4 to 54.8 but its rank today is driven by an overnight jump in its Technical Score from a lowly 32 to a respectable 68.6 with all three time frames seeing strong gains.  Those gains can be explained with a look at its chart that shows the fund preparing for a breakout from a multiyear downtrend.   The constituents listed on its tear sheet make products in the areas of alternative energy, better energy efficiency and new energy activity.  They are currently trading at levels that give PUW a decent Fundamental Score of 69.8, although that is down from recent levels as the fund has been performing better.

We will be watching what happens to that 70th place rank if Friday’s chance of showers weather forecast for Wall Street is correct and the apocalypse doesn't happen.  If Preppers emerge from their bunkers Saturday morning and find they are alone with the cockroaches and the few remaining Twinkies, it won’t matter what ETF they purchased today.  But how will this fund look if the world looks the same Saturday?  Maybe it will drop back down into Quant’s bunker.  But maybe its move up today has nothing to do with astrological cycles or Mayan predictions.  Maybe it has more to do with expectations that the Republicans will revert to form and give President Obama everything he wants, fueling the tanks of these green energy companies for the next four years.  We like to say that Quant moves in mysterious ways but when a fund gets to the double digit ranks, it has a good chance of outperforming the market over the next few months.  Assuming of course we don’t all get sucked into a black hole.  We hold no such assumption and are continuing to prepare for Christmas and a prosperous 2013, Quant will help with the latter.

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