Now onto the markets - the season of jolly proved to be a roller coaster week for investors as the markets rallied immediately after Christmas Day and ended the week up on the major indexes providing long needed relief. Investor sentiment, however, remains cautious as concerns persist ranging from quickly rising interest rates, increased questioning of confidence in the current administration as the exodus of senior White House Advisors continues, credit concerns and Brexit. Trade tensions and a growing sense of a global slowdown also weigh on investors.
US indexes ended the week in positive territory - the S&P 500 closed at 2,485.74 and the broader NASDAQ Composite closed at 6,584.52 for a weekly jump of 2.86% and 3.97 %. Nevertheless, entering the last trading day of year, the indexes YTD were still down to a negative 7.03% on the S&P 500 Index and a negative 4.62% on the NASDAQ Composite.
Market volatility the past two weeks has been accentuated by tax selling and low liquidity due to the holidays and upcoming regulatory reviews on the major financial institutions to access capital haircuts. In January we would expect to see more liquidity reentering the markets thereby reducing the move of markets on low volume. A number of articles attracted our attention this week showing a marked change in the market’s paradigm to an over abundance of caution.
First, we noted Mohamed El-Erian’s December 30th article in Bloomberg which sited the pullback of banks in market-making activities this month due to regulatory reviews and how market volatility could have the effect of accentuating any global economic slowdown. See his comments at:
Second, we noted a “rant” by Jeremiah Johnson on ZeroHedge titled The Calm Before the Storm. What struck us was his list of investor concerns and tone of the article which was reminiscent of Rick Santelli’s rant on CNBC on government bailouts which proved to be the firing shot to mobilize the popular Tea Party. This article can be found at:
Now let’s look at our ETFG Weekly Select List
To best support the ETF selection process, The ETFG Weekly Select List highlights the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model. We highlight a couple of ETFs that attracted our attention.
The extreme volatility the past two weeks makes us cautious but we these funds had significant jumps: SPHD went jumped 4 ratings to 1 for those looking for a high dividend play. Likewise, ITEQ, a Middle East play jumped 3 ratings to 2 as did NFRA, a natural resources play. It jumped 4 no doubt as a play on the beaten-up oil and natural resources sectors.
We suggest keeping a mindful eye on tools like our Select List and Risk and Reward Ratings that can be used to evaluate the vast set of opportunities in the ETF marketplace. Today’s market realities require a new approach to macro investing, one in which individual investors now have access to tools via ETPs to customize risk and return profiles in their portfolios. Use our Scanner to find those funds.
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