Monday, November 26, 2018

Tough Sledding

Monday November 26, 2018 – Thanksgiving did little to lighten the mood in the markets, as last week's selloff continued unbated to sink U.S. stocks to their lowest levels in more than a year and erase yearly gains. This week's downbeat atmosphere was ignited by mounting growth concerns for the formerly high-flying technology sector. The specter of trade conflicts and their consequent disruption to global supply chains and demand, along with fears of stretched valuations and a looming regulatory clampdown, helped spark a selloff in technology. This selloff soon bled into other sectors, notably in Consumer Discretionary where concerns about slowing global growth, rising costs and flattening margins weighed heavily.

Other areas of the market flashed similar warning signs. Unresolved and escalating U.S.-China trade tensions continued to cast a pall, while European political turmoil surrounding Italy and Brexit loomed large. Negative economic data in U.S. housing starts, durable goods orders and consumer confidence further fueled this negative backdrop. Lastly, turbulence in the energy markets added to the already strong selling pressure. Concerns about rising inventories, contracting demand, a rising U.S. dollar and global policy divergence helped extend oil price's decline to its lowest level in over a year and down over a third since October.

Following this week's abbreviated, yet frenetic activity, the S&P 500, DJIA and Nasdaq suffered declines of 3.8%, 4.4% and 4.3% respectively.

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

ETFG Quant Winners: Reality Shares DIVCON Dividend Guard ETF (GARD) experienced the largest rise in it's weekly ETFG Quant score with a 38.65% gain. As growth stocks come under increasing pressure, ETFs with steady dividend paying constituents may offer some ballast.

Other notable gainers include the iShares Edge MSCI Min Vol Emerging Markets ETF (EEMV) and Invesco S&P International Developed Quality ETF (IDHQ), which illustrates our model's current emphasis on quality and stability amid the current fraught global environment.

ETFG Quant Losers: Unsurprisingly, growth and technology focused ETFs are heavily featured in this week's top losers list. These include the SPDR Portfolio S&P 500 Growth ETF (SPYG), Vanguard Information Technology ETF (VGT), and First Trust Nasdaq Semiconductor ETF (FTXL), which all shed over 8.0% on the week.

ETFG Weekly Select List - the five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

This week the highest rated fund by Sector is the iShares Nasdaq Biotechnology ETF (IBB) with a 69.80 quant score. Last week's leader was the iShares Global Healthcare ETF (IXJ). Healthcare's leadership hold reflects its broadly favorable sector outlook according to our model.

Conversely, the lowest rated Sector fund this week is the SPDR S&P Telecom ETF (XTL) with a 54.90 score. That is a shift from last week where the VanEck Vectors Gold Miners ETF was the lowest rated fund with a score of 57.50.

By Geographic Region, the iShares MSCI Turkey ETF (TUR) sits atop our weekly rankings with a quant score of 74.60 and a 10 Reward score. TUR also leads our weekly rankings by Strategy, where it resides within the broad equity group. This is a change from last week, when the U.S. focused iShares Russell Mid-Cap ETF (IWR) led the geographic and strategies rankings with a 73 score. IWR sits with in the North American and Mid Cap peer groups.

To help navigate the current volatile investing environment, monitor our weekly Select List to help identify attractive opportunities within the vast U.S. listed ETP marketplace.

Thanks for reading ETF Global Perspectives.

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