When our models began to favor the broad US market last December it was signaled by the SPDR S&P 500 Fund (SPY) and iShares Russell 2000 Growth Fund (IWO) bouncing in and out of the top 10 ranks as the market bounced along the edge of the fiscal cliff. January saw the small caps take the lead in the rankings and the market but February saw a shift to large cap where SPY spent most of the month at 1st place and got all ten Green Diamonds on 4 days. Small caps continued in the top ranks and scored even better as they began to falter late in the month. By March, the mid caps joined the party with the SPDR S&P MidCap 400 Fund (MDY) getting to 9th place on March 6th with a few more top 10 days later in the month. Here on April 8th Quant continues to favor the broad US market with SPY, IWO and MDY ranking in 1st, 3rd and 5th place.
Since all three have been leading the world this year it is not surprising to see solid Behavioral Scores around 70 for each. That score comes from equally weighting the technical and sentiment scores which in the case of IWO is somewhat lopsided with an 81.7 sentiment score representing bears smelling blood as the technical score has deteriorated down to a still OK 59.7. SPY’s 65.7 sentiment score has also deteriorated over the past couple of weeks which could signal a market becoming overly complacent. There is reason for complacency perhaps as all three get solid Fundamental Scores led by SPY’s 83.5 while IWO’s 72.3 and MDY’s 70.2 do not suggest valuations are getting stretched yet. The last 2 have identical 4.67 Red Diamond Risk Ratings, just a teeny bit above today’s all equity ETF average of 4.64. While that has brought the top 10 average Risk Rating above 4, the top 25 and top 100 still average below that mark.
With so much political and economic trouble around the world, the US has been an island in the storm. We like to remind you that the ETFGsm models do not make directional calls but predict relative outperformance. So if those troubled waters do reach our shores, the broad US market should withstand it better than other areas of the globe. A quick check of the Quant page each day will give you suggestions of where to allocate your equity allocation; it has had an uncanny ability to consistently identify the best performing equity ETFs for the intermediate term.