Tuesday, July 16, 2013

It is going to be 96 degrees in the shade on Wall Street again today, a good day to phone it in.  If you don’t want the NSA listening, you might call on a Leap Wireless prepaid phone.  AT&T thinks plenty of people are doing that so they offered twice the price to acquire the company which gave a leap to the telecomm sector and the iShares Dow Jones U.S. Telecommunications Index Fund (IYZ) in particular.  The fund had ranked in the lower half for most of the past year until it broke into the top 100 in late April, made 10th place on May 31st, and is today’s  new Quant leader.

The move in late April was driven by a rising Fundamental Score into the upper 60s even as the price rallied 10%.  By late May its technical score also rose into the 60s and a rolling over chart brought out the bears which boosted its sentiment score into the 80s.  The roll over gave back most of the April rally to June 24th but the price held around its February high.  Bouncing off that level drove its technical score into the 70s, at a similar level to its Fundamental Score.  It is nice to see technicals and fundamentals rising at the same time and the moves were confirmed by the fund paying its highest dividend ever on July 2nd.  Today we see its proprietary ETFG® implied volatility score rising from 22.3 to 73.5 which gets its sentiment score up to 66.9.  It all combines for its highest ever Total Score of 73.1 and today’s 1st place ranking.

Some of the leap in IYZ is attributable to the takeover of Leap Wireless accounting for almost 3% of AUM but AT&T accounts for more than 10%. The top constituent declined on the deal but held above a low from a few days ago which was higher than a low from the prior week so the market seems to be encouraging similar deals.  IYZ’s 26 constituents would be prime players in such a trend and combine for a 9.47 Green Diamond Reward Rating while carrying a lower than average 3.85 Red Diamond Risk Rating. Exhibiting a balance of strong Fundamental and Behavioral measures puts the fund in Quant’s sweetest spot today.  Take a look at this timely opportunity and thanks for taking a look at ETFG® Daily Perspectives. 

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