Who Would Have Thought....

Monday, August 7, 2017 - The beginning of 2017 brought some hot topics to the forefront. In the political world, it was if President-Elect Donald Trump could live up to his promises as the new Commander-in-Chief, that discussion is ongoing and will be for years. In the financial world, it was whether the Dow Jones Industrial Average could eclipse the 20,000 mark and more importantly hold its ground there. That topic of discussion ended quickly and only 8 months later, there is talk of Dow 25,000.

As markets continue to move higher, they are being supported more by corporate earnings rather than shifting changes to our economic policies, which many thought would drive the markets, i.e., the Trump Trade. This week, big tech was what helped bring the Dow over 22k as Apple reported strong earnings and added 49 points to the blue chip index on Wednesday.

Apple also helped moved some ETFs higher, like the Technology Select Sector SPDR Fund (XLK), which closed at 57.61 on Friday, a level that the fund hasn’t seen since 2000. XLK is heavily weighted with Apple as it makes up for 14.73% of the fund which has a total of 87 holdings. The iShares U.S. Technology ETF (IYW) which has the largest overall allocation to Apple in any fund, 17.18%, reached all-time highs this week for the same reason as it closed at 145.96 on August 1 (it closed the week out at 145.90.)

In our Quant movers, we saw anything but technology funds gaining momentum. iShares Edge MSCI Min Vol Global Currency Hedged ETF (HACV), Guggenheim Shipping ETF (SEA), Deutsche X-trackers MSCI All World EX us High Dividend Yield Hedged Equity ETF (HDAW) and iShares Global Utilities ETF (JXI) all saw the biggest jumps in their overall reward scores with gains of 9.24, 8.87, 7.52 and 7.36 points in the past week respectively. This may show a shift in that value oriented investments may look like the best play in the short term.

In the Quant losers last week, many of Fidelity’s funds took a hit. Their MSCI Information Technology (FTEC), MSCI Health Care Index ETF (FHLC), MSCI Consumer Staple Index ETF (FSTA) and MSCI Energy Index ETF (FENY) led the way losing 9.64, 9.35, 9.13 and 9.00 points to their overall score respectively.

Let’s see if the markets can keep up their momentum during these dog days of summer. Who knows maybe we will be talking about the Dow 30,000 sooner than we think!

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