Tuesday, September 4, 2018

New Highs via Tech

Tuesday, September 4, 2018 – Stocks recorded solid gains last week, helping bring most of the major indexes to all-time highs. The technology-heavy Nasdaq Composite Index performed best and crossed the symbolic 8,000 threshold for the first time, while the Dow Jones Composite Index lagged and remained roughly 2.5% off the highs it established earlier in the year. Technology stocks also outperformed within the S&P 500 and growth shares built on their substantial lead over value stocks for the year to date. This equity performance is supported by strong corporate and economic fundamentals. On the corporate side, we’ve seen two consecutive quarters of earnings growth greater than 20%, compared with last year. Even the retail sector, once considered to be weakened by competitive pressures, showed renewed strength as major retailers like Walmart and Target reported strong quarterly earnings.

In other trade news, there were reports that the Trump administration is considering taking further steps to implement new tariffs on $200B of Chinese goods. This action, if it occurs, is likely to be met with a reciprocal response by the Chinese government and is another step in the escalation of trade tensions between the two countries. Trade and policy uncertainties are a headline risk, but the fundamental foundation of economic expansion and rising corporate profits are still very much intact and can help extend the bull market.

In ETF news, Technology ETFs as well as Healthcare and Consumer Discretionary ETFs had the most return over the month of August. According to the ETFG Heat Map Tech ETFs had an average return of 6.70%, Healthcare 4.96%, and Consumer Discretionary 4.04%.

ETFG Quant Movers – those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings: 

ETFG Quant Winners: Vanguard Dividend Appreciation ETF (VIG) rose 7.83 points to 50.83, Vanguard Mid-Cap Value ETF (VOE) was up 6.87 points ending the week at 45.27, SPDR EURO STOXX 50 ETF (FEZ) climbed 6.26 points to 61.43. Rounding out the Top Five gainers were Vanguard Mega Cap ETF (MGC) up 6.11 points to 43.86 and VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) closing up 6.01 points at 49.92.

ETFG Quant Losers: On the heels of new developments in the U.S. China trade war, the biggest loser of the week was Global X China Consumer ETF (CHIQ) dropping nine points to 36.37. Cambria Foreign Shareholder Yield ETF (FYLD) dropped seven points to 48.28, iShares Edge MSCI Min Vol Europe ETF (EUMV) fell 6.68 points to 47.82 while iShares Russell 3000 ETF (IWV) and iShares Edge MSCI Min Vol EAFE ETF (EFAV) both fell 6.54 points to 45.55 and 45.25 respectively.

ETFG Weekly Select List - the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model. Because of the sector’s success in the major indexes this week, we’d like to highlight some substantial movement in the Technology Sector portion when comparing this week’s Select List to last. First Trust Nasdaq Semiconductor ETF (FTXL) and Global X FinTech ETF (FINX) remained in the top two spots from last week while three newcomers rocketed up the select list: BlueStar Israel Technology ETF (ITEQ), 3D Printing ETF (PRNT), SPDR NYSE Technology ETF (XNTK). As technology stocks continue their hot streak keep an eye on the ETFG Weekly Select list to see what ETFs are riding the bull markets alongside them.

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