Wednesday, February 6, 2013

We woke up this morning, smiled at the rising sun and three little birds sat by our doorstep singing don’t worry about a thing.  Quant has a similar message for you as yesterday’s big decline in the top ranks' average risk scores continues today.  Whether we are about to correct or not, Quant says it’s not a time for worrying, don’t rock the boat if you want to feel like a sweepstakes winner.

Those low risk names from yesterday are still in the top 15 and today we have a couple of others for you.  As the Dow flirts with 14,000 everyone says yeah and Quant says the Diamond is a girl you want.  The SPDR Dow Jones Industrial Average Fund (DIA) has been scoring well lately and is up to 4th place today with a low 2.96 Red Diamond Risk Rating.  Its low risk comes mostly from its structure and sponsor as its volatility and deviation measures within that risk rating are higher.  Solid 60s scores across most categories get it in the top 100 but its high 88.1 Fundamental Score gets it in the top 10 for the second day in a row. 

Also giving Quant positive vibrations is the Powershares Dynamic LargeCap Growth Fund (PWB) in 7th place today with an even lower 2.49 Risk Rating and within that one are even lower volatility and deviation scores.  Liquidity risk is its highest internal risk score so be careful if you are putting on a large trade with this one, its average daily trading value is less than a million dollars.  If you are looking to invest less than that, this smart beta fund’s valuation should calm any worries as it earns a very high 96.6 Fundamental Score today.  Technicals are good at 68.2 but the bears have thus far stayed away from this one’s algorithm, its sentiment score is a middling 54.2.  It made a big jump of 141 positions yesterday into 12th place, its highest rank until today’s 7th place.  Performance hasn’t been anything special yet but Quant thinks this one is coming in from the cold.

The movement in the rankings after Monday’s selling was one of the starkest we’ve seen.  The low risk message had been building for a few weeks culminating in those average risk ratings of our top ranks falling below 4 where they remain today despite yesterday’s positive tape.  With so much trouble in the world Quant suggests we take a step back from the rat race and get in a mellow mood.  Thank you for hearing our song today and happy birthday to Ronald Reagan and Bob Marley.

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