Friday, September 6, 2013

Redemption Run for XME

We have been a little hesitant to highlight a recent high ranker because it burned us in the past.  Today’s 5th place SPDR S&P Metals and Mining Fund (XME) spent 14 out of 16 days in January holding  top 10 rankings before falling out of the top 100 in early February.  It then sustained a bear market for most of 2013 until the late June lows.  It began to score well again in June and since July 2nd, it has spent a remarkable 42 out of 47 days in the top 10. 

It declined by 3% over that January run before Quant corrected the bad call but has gained 10% since July 2nd in a basically flat market; so we are willing to let bygones be bygones.  On July 8th we compared it to a low beta gold miners fund and it has traded as such in the 2 months since.  One would expect such positive recent performance would boost the technical scores on these industrial metals miners but as we like to say, Quant moves in mysterious ways. XME’s short term technical score is its highest but only at 41.8 with intermediate and long term both down in the 20s, all three are significantly lower than early July so a warning light is flashing.  It must be flashing brightly because the bears have pushed its sentiment score up to 80.5 which is offsetting the deteriorating technicals on the Behavioral side of the model.  Positive reports have pushed its Fundamental Score higher as the price has risen, which is something we like to see.  Although its PE score is low at 38.8, it has 98s for cash flow, book value and yield scores.

XME’s bear market during the first half of the year has pushed its Risk Rating up to 5.28 compared to today’s equity ETF average of 4.46.  That high risk comes from the price risk side with Volatility and Deviation each scoring above 7 but its integrity risk measures are below average.  So consider the high risk and poor technical scores, the bears could be right.  As always, if you have any questions our dedicated staff stands ready to assist at .  But also consider Quant’s track record which is second to none out there.  We will prove that again next week with our monthly performance reports.  Until then, thanks for reading and have a nice weekend.

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