Meeting you in the mornings here throughout 2013 we have been reporting Quant’s consistent focus on US broad market funds which have spent the year knockin' on heaven's door. Our words may have sounded like an idiot wind at times because the ETFGsm models did not recognize the huge run in the Japanese market which scored well fundamentally but not technically. Those fundamentals have come down, and not only because the prices were going up, even though the strong charts have not boosted the technical scores as much as you might expect. The short term charts look good but long term charts still reflect the rollin and tumblin Nikkei index over the prior two decades. Today we have a Japanese fund finally making the top 10 as the WisdomTree Japan SmallCap Fund (DFJ) jumped 52 positions overnight into 7th place this morning.
If 7th place looks lucky, its alright 66.6 Fundamental Score may raise fears that this is a Jokerman. That high rank is most attributable to a rising sentiment score driven by its put/call score almost doubling which could just as easily fall by half. Its 91.4 volatility score is more encouraging as our institutional clients have found that metric to be an excellent secondary screen in their models. The technical scores, which are driven by relative strength and moving averages, have been rising through the year from the 20s to the high 60s early this month but came down to the low 50s before yesterday’s hurricane on the Nikkei. That decline actually helped DFJ’s technical score as the fund is now less overbought. The verdict on Abenomics is still out but as the Japanese market sheds tears of rage, DFJ’s 8.48 Reward Rating suggests its nimble small caps may grow like they are forever young.
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