The winds are up and the seas are agitated as Wall Street is under a blizzard warning. As the kids get their shovels and sleds ready Quant continues to batten down the hatches, two additions to today’s top 10 both carry Red Diamond Risk Ratings below 4. This low risk theme is coinciding with the stock market’s inability to make a new high. Are we about to slide down the other side of the beautiful mountain chart the market has been drawing since last fall? Or even worse the one from 4 years ago? Readers know that Quant doesn't make directional calls but it is clearly saying low risk names will outperform in coming months.
One of those additions to the top ten has been here recently. Today’s 6th place iShares Russell 3000 Fund (IWV) got to 5th place on December 27th when the model turned its focus to the US. It isn't easy for this US large cap fund to outperform the S&P 500 with its similar constituents but it has since then which has kept it in or near those elite ranks. That accounts for its pretty 73.5 technical score as it has been proficiently scaling that mountain chart. Despite gaining more than 1% per week so far this year, its valuation remains healthy with an excellent Fundamental Score of 81.7. Keeping with Quant’s new low risk theme, IWV has a low 3.97 Red Diamond Risk Rating.
Carrying even lower risk is the iShares MSCI Switzerland Index Fund (EWL) bringing its 2.66 Red Diamonds into the top 10 for the first time. We highlighted it when it got to 16th place on January 22nd and it too has outperformed since then, even with yesterday’s 1.8% face plant. Quant liked that one day correction which was good enough for a jump of 15 positions into 8th place this morning. That brings up another interesting aspect of the recent rankings where we are seeing weak performance scoring better; maybe Quant wants to hide in those funds that have already taken their lumps. Like others we have written about this week, EWL’s technical score is among its lowest although still very healthy at 68.5. We speculated a couple of weeks ago that the swells left Davos and put on bearish Switzerland trades as that was when its sentiment score bumped up, it has continued to rise up to 78.2 today. Valuation is solid as the Fundamental Score is EWL’s best at 79.7.
So pull in your risk and pull up your boots, the snow is coming and things are getting slippery. It remains to be seen how steep this other side of the mountain becomes but Quant says to be careful. We are focusing on Cedar Hill in Central Park where the slides will be joyous. We hope you too get in position to enjoy the storm and have a nice weekend.