Wednesday, April 10, 2013

Wall Street is turning on the air conditioning for the first time this year and energy funds are rising in the ranks.  You won’t be surprised to see the SPDR S&P Oil & Gas Exploration & Production Fund (XOP) in 3rd place today as it has been right around there all year.  The SPDR Energy Select Sector Fund (XLE) has also been consistently scoring well though usually not as high as today’s 8th place.  The Market Vectors Oil Services Fund (OIH) has reached the top 10 occasionally in 2013 and is tied at 10th place today.  Digging a little deeper finds the Vanguard Energy Sector ETF (VDE) and the SPDR S&P Oil & Gas Equipment & Services Fund (XES) in 14th and 17th place which is less familiar territory for each this year.

Using the ETFGsm Scanner we can select Energy under Focus from the Filter menu and see all the energy funds in our database.  To narrow it down, we can sort by high Quant Scores and then select those 5, and a few more with high scores, by checking their Compare boxes and then the Compare button up top.  We notice most have performed well and still have healthy valuations. We also notice that most have higher than average Risk Ratings and only XOP earns a Reward Rating above 8.  This shows a difference between Quant and the Diamond models where the latter is not as excited about the energy sector.  Clicking the Quant Report button up top brings up our selections on their own Quant screen showing most scoring well fundamentally with scores in the 60s and similar good but not great technical scores.  Our higher ranking funds get there on high sentiment scores mostly driven by option activity.

Energy is the rare sector that has scored well consistently this year and it is one of the few sectors that have consistently kept pace with the US market’s monster run.  Maybe it’s the heat in the east or the snowstorm in the plains today, or maybe investors are accumulating positions in this fundamentally healthy sector.  We often say Quant moves in mysterious ways but the performance of the ETFGsm models is no mystery because we publish them monthly.  Those updates will be up any day so don’t forget to check in for that check up. Thanks for reading and stay cool today.

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