Tuesday, April 16, 2013

An old wise man of the market used to tell us “it’s not the snake you see that bites you.”  As our eyes were fixated on the gold led commodity selloff, evil in the form of terror at the finish line sunk its fangs into America’s psyche again. US equities accelerated their selloff immediately following the twin blasts at the Boston Marathon and ETFs tracking international indices experienced similar declines.  The SPDR S&P 500 Fund (SPY) was down almost 1.5% before the attack and closed down by 2.32% which must have been the bid because the index closed down a slightly lesser 2.30% for the day.  The fund is back to its now familiar 1st place Quant ranking today.

Europe and Asia were closed in that last hour of US trading and time will tell the quality of the price discovery the funds tracking those markets provided.  So far on this April 16th Asian markets are mixed and Europe is down less than 1% across the board so the international ETFs that fell in concert with the US market were more right than wrong.  Our models saw little change overnight but the top ranks see even more US funds and the average Red Diamond Risk Rating of those top ranks has climbed with additional small cap, mid cap and energy funds pushing it up.  Yesterday we mentioned the models being relevant to traders and investors but they are not designed for very short term trading.  That post provided data points showing how Quant can miss some wiggles so we would like to give global markets a day or two to asses any reaction to this. 

There is more to process than the terror in Boston.  Was the selloff in gold and commodities from central bank and hedge fund liquidation or signals of a slowing world economy?  Time will provide clear answers but markets will provide earlier ones.  Quantitative analysis is the science of interpreting those important market signals and ETF Global has models that have proven as good as any and we will keep you apprised of the messages they convey.  Being from the Bronx, we are not going to call ourselves Red Sox fans but are proud to say we all Bostonians today.  Our thoughts and prayers are with our friends in The Cradle of Liberty.

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