Monday, December 18, 2017

Another Week, Another Record

Monday, December 18, 2017 - The markets continue to show strength and resiliency this year as the S&P 500, Dow Jones Industrial Average and Nasdaq Composite finished the week at records highs. Their surges of 0.9%, 1.3% and 1.4% respectively were driven mainly by the tax-reform legislation making its way through Congress. Wall Street is banking on this legislation being a done deal and believes that this lower corporate tax rate will continue to spur growth throughout the industry.

In ETFs, we also saw more growth in the form of inflows.  As of Wednesday, we saw over $18B go into the equity-based products last week, according to our ETFG Fund Flow summary.

The only thing more unbelievable than the growth in the ETF industry this year has been the growth in Bitcoin. As futures started trading on Bitcoin last week, investors poured money into the products so fast that the CBOE had to halt trading momentarily because of the sharp volatility upwards. The race to creating the first Bitcoin ETF is also heating up with more issuers looking for approval of a product by the SEC. Rex Shares and Van Eck joined the long list of issuers trying to push a product through and the fact that there are futures now can only help their cases.

Going back to the lower tax rates, they would inherently help small and mid-cap companies and our ETFG Quant model, which is forward looking, found some ETFs that track those types of companies to be in favor last week. In our ETFG Quant Movers, Vanguard Mid-Cao Growth ETF (VOT), SPDR S&P International Small Cap ETF (GWX) and Vanguard Small-Cap ETF (VB) all placed in the top 10 for weekly gains to their overall score. They added 10.19, 8.35 and 7.93 to their scores respectively.

On the losers side of our scoring, we saw Oil and Gas products fall out of favor as the SPDR S&P Oil and Gas Exploration and Production ETF (XOP) and the First Trust Nasdaq Oil and Gas ETF (FTXN) lost 7.61 and 7.07 to their reward scores respectively.

With two weeks left in the year, will the markets be able to continue their surge? Up to this point, it does not look like anything will be able to stop it from moving forward which would only make the holiday season that much more special to cap the end of a great year in the investment world.

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