Monday, May 6, 2013

We begin the week with the SPDR S&P 500 Fund (SPY) in Quant’s 3rd place, familiar territory as it has been in the top three almost every day since early February.  Its Total Score peaked at 81.4 on February 27th, drifted as low as 70.8 in mid March when it fell out of the top 10 for a day and is at 72 today.  Although it is trending down, the fund continues at the top of our relative ranks as most high ranking funds also see down trending Quant Scores.  Two of Europe’s largest economies see their iShares funds, France’s EWQ and Germany’s EWG, in the top 10 at their highest ranks this year, despite scores that peaked in February.

Each saw higher Total Scores back then when a 70 was good enough for top 50 status but today EWQ’s 69.4 is good enough for 8th place and EWG’s 68.7 is good enough for 10th.  The funds had higher Fundamental Scores in February than now but their recent rallies may be signaling the bottom of their recessions that we speculated about on Thursday.  Both have slightly higher technical scores now but their sentiment scores are below the levels reached when the bears were having their way in February, although still elevated at almost 89 for each.  EWQ and EWG have traded in tandem all year and are matching their year to date peaks reached on February 1st so time will tell if Thursday was as pivotal as we speculated but we do seem to be at an important juncture for Europe’s equity markets.  Within the slightly better technical scores are deteriorating long term scores suggesting their charts need to break out of the downtrends since their 2007 tops. We are not likely to see better fundamental measures anytime soon unless the markets drop as much as their economies have.

Fundamentals are not looking good anywhere in the world so the US is still the cleanest shirt in the hamper.  Despite the economic turbulence, markets are rising on the tsunami of central bank liquidity with some of the world’s central banks even buying stocks (see April 26 post).  The ETF Global models have proven adept at predicting where that money will go and they still say the broad US market will gain most of it with Europe beginning to also rank better.  We will be following this developing trend and we thank you for following ETF Global, have a good week.

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