Friday, September 20, 2013

FEZ Likes Angie

We reported yesterday about Quant’s prescient emerging markets call in front of the Fed’s no taper announcement and today the algorithm seems to be predicting a Merkel win in the German elections.  Not because we see German funds scoring well, we don’t, but because once again we see the SPDR DJ Euro STOXX 50 Fund (FEZ) in the top 10 at 3rd place.  We mentioned it holding 2nd place on Monday and if you go back to last month, we wrote about it on August 7th pointing out how well it has done whenever it ranked this high.

That was when markets were celebrating new Bank of England Governor Mark Carney’s dovish policy announcement and that day’s post goes through the fund’s history in Quant which has done a very good job calling the wiggles.  That record is intact as FEZ is up more than 6% since then as the S&P 500 is up about 2%.  The reasons for the high ranks have shifted however.  On August 7th FEZ’s 9th place rank was driven by its Fundamental Score of 76.8 supported by a solid technical score of 73.  Sentiment was weaker at 59.8 as bullishness pervaded on the BOE’s new dovish Governor.  Today’s 3rd place rank comes about from a different perspective.  The fund’s big rally has actually brought its technical score down to 65.5 signaling it may be getting overbought.  Fundamentals have also come down to 66 as the price has risen.  Those circumstances have the bears smelling blood with its sentiment score rising up to 72.7 with solid numbers in all three subcategories.  We have seen some powerful short squeezes this week and there could be more in store for FEZ.

Expectations are for an Angela Merkel victory in this weekend’s elections despite her poor showing last week.  Even though German ETFs are not scoring well, we do see the Netherland’s in the top 10 with EWN at 9th place and performing well since we mentioned it Wednesday.  It is newly elite this month with no such rich history like FEZ but is off to a great start.  It ranks well today with 68.8 in both technicals and Fundamentals with sentiment lagging at 58.8. 

After 259 posts bringing you the best ideas from the world class ETF Global® models, your humbled blogger is taking a long deserved vacation.  As always, thank you for reading ETF Global® Daily Perspectives.

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