New Bank of England Governor Mark Carney made his debut monetary policy
announcement today saying he will keep interest rates low and maybe expand
further until unemployment in the UK
falls to 7%, which he anticipates will take about two years. The dovish policy is in line with
expectations which contributed to the SPDR DJ Euro STOXX 50 Fund (FEZ) moving up to 9th
place. It has had a choppy year of
trading and Quant has done a good job calling the wiggles.
It made the top 10 for the first time last August before going on
a world leading 20% run. High Fundamental Scores and bearish sentiment gave FEZ
the 10 Green Diamond Reward Rating on 17 days in August and September. It fell out of the top 50 on a number of days
in the early autumn but got back to the top 10 at a low in mid November. Fundamentals were not as high then but
sentiment drove it back to the upper ranks.
It began to lose top 50 status again in December as fundamentals and
sentiment deteriorated even as technicals improved. Its next trip to the top 10 was in late
February after a 10% correction helped get those fundamental and sentiment
scores back up, this time as technicals weakened. Poor earnings reports dinged
the Fundamental Score through much of the spring but high sentiment scores kept
the fund in the top 50 for most of the time. It dropped out of the top 100 in mid
May after clawing back that 10% winter correction. Traders who used the exit from the top 100 as
a sell signal were glad as the fund went back down to its prior lows in the
worldwide late June swoon. It made it
back to the top 50 on July 9th, top 20 on July 16th and
top 10 this week. Today’s 9th
place rank is driven by a 76.8 Fundamental Score and 73 technical score
although current bullishness on Europe has brought sentiment down below 60.
Traders have done well with FEZ when it has ranked in the top 10
and long term investors have had to endure some volatility but are net positive
from any of those points. If you don’t
mind its higher than average 5.26 Red Diamond Risk Rating, FEZ looks like a
good way to ride that Bank of England liquidity.
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