Monday, February 4, 2013

Quant still loves the country that doesn't have enough energy to light a Super Bowl, really.  The top ranks are still unusually weighted towards the US and within those ranks we continue to see a weighting to the energy sector.  Today’s 2nd place SPDR Energy Select Sector Fund (XLE) has been scoring well for several weeks and one of today’s big movers is the iShares Dow Jones U.S. Energy Sector Fund (IYE) jumping 61 positions into the top 50 at 48th place.  The two are closer than their ranks suggest.

Both come from strong sponsors and have plenty of liquidity accounting for mid to upper 70s Quality Scores and their similar constituents account for similar mid 80s Global Theme Scores.  The reason why XLE gets the better Fundamental Score of 71.2 to IYE’s 58.5 is their yield scores which can reflect trade lot strategies within the funds as much as the dividends actually generated by the constituents.  Both funds have nearly identical price charts and very similar technical scores around 70.  Differences here can be attributable to different lifespans even though both have been around for more than a decade.  The larger XLE has a higher put/call score driving its sentiment score to 78.6 compared to IYE’s 66.5 which is the main reason why it scores and ranks better overall.

Those nearly identical price charts explain their nearly identical Red Diamond Risk Ratings of 3.77 and 3.78.  XLE has the lower risk rating and higher Green Diamond Reward Rating of 9.26 to IYE’s 7.60, mostly because of those higher sentiment measures.  Despite the gap in those ratings you should expect either fund to perform about the same and Quant thinks that will be better than most for the next few months at least.  Quant’s energy and US weightings have been performing well and it looks like the ride is just being joined by IYE.  Thank you for joining us and good luck this week.

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