Monday, January 14, 2013

Since early November, we have seen Quant’s elite ranks dominated at various times by emerging markets, Europe, US large cap and US small cap.  Through it all one fund has consistently been scoring in or near the top 10, so we wanted to take a deeper look at the SPDR Industrial Select Sector Fund (XLI).

It finds itself in 5th place today with a high 82.2 Sentiment Score suggesting market skepticism that it can keep its rally going.  Although its short term technical score has weakened down to 46.9, its intermediate and long term technical scores are still close the 70 level that all three have been enjoying recently.  Fundamentally it has seen solid low 70s scores for the past few months which has most accounted for its longevity in the elite ranks.  One of XLI’s more notable attributes is its low 2.75 Red Diamond Risk Rating.  Being a large and liquid US based fund out of State Street helps to keep that risk rating low but the deviation and volatility scores around 5 shouldn't cause you to lose too much sleep either.  A look at its 61 constituents shows a who’s who of large US industrial conglomerates led by General Electric with an 11.77% weighting.

XLI has been consistently scoring well partly because it has been consistently performing well.  Since it first broke into the top 10 on November 2, it is up by 6.14% compared to the S&P500’s 4.09% rise. That weakening short term technical score could signal the end of its run if not for the rising Sentiment Score which could signal the fuel for its next leg up.  Balancing it all out, Quant continues to expect this industrial fund to continue to outperform.  We thank you for continuing to use ETF Global and wish you good luck this week.

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