Monday, December 17, 2018

Seasonal Deal of the Day?

Monday, December 17, 2018 – This time of year, most people are regularly reminded about the "deal of the day." However, the markets continue to be jolted by the "worry of the day." Both may capture your short-term headlines and while best deals are usually gone in a flash, many of the worries are part of bigger themes that could continue to keep markets volatile. Investors are constantly reminded by signs of slower economic global growth, trade conflicts and concerns about the pace of Federal Reserve interest rate increases.

Next week, the main focus will be on the Federal Open Market Committee (FOMC) decision on Wednesday, where the Fed is generally expected to raise rates by 25 bps. Other important economics include releasing housing and building stats on Tuesday, along with consumer confidence on Friday. Typically, stocks have risen along with the underlying fundamentals of economic and earnings growth, which has a strong chance of remaining positive – making long-term picks the "deal of the day.”

Most major benchmarks ended lower for the week. The technology-heavy Nasdaq Composite Index (Fidelity NASDAQ Composite Index Tracking Stock (ONEQ)) held up best and ending the week in positive territory for the year-to-date period. Smaller-Cap shares performed worst, with both the S&P MidCap 400 Index (SPDR S&P Midcap 400 ETF Trust (MDY)) and the Russell 2000 Index (iShares Russell 2000 ETF (IWM)) hitting new 52-week lows. Within the S&P 500 Index, Utilities shares performed best (Utilities Select Sector SPDR Fund (XLU)), while Financial shares (Financial Select Sector SPDR Fund (XLF)) were notably weak due to concerns over tighter lending margins due to declines in longer-term Treasury yields.

ETFG Weekly Quant Movers – In the ETFG Quant Movers, we saw both Sector and Factor oriented ETFs gain the most percentage points to their overall scores. To highlight a few, Invesco Global Agriculture ETF (PAGG) and WisdomTree International Dividend Ex-Financials Fund (DOO) saw a 18.02% and 17.50% gain respectively. While USAA MSCI International Value Momentum Blend Index ETF (UIVM) and iShares Core High Dividend ETF (HDV) had a 21.73% and 18.92% respective gain to their Quant Total Score.

Honorable mentions in the loser’s column, we saw a blend of ETPs dropping some percentage points to their overall score. The iShares Core S&P Total U.S. Stock Market ETF (ITOT), Schwab U.S. Large-Cap Value ETF (SCHV) and Oppenheimer Russell 2000 Dynamic Multifactor ETF (OMFS) lost 22.46%, 20.84% and 19.74% to their overall scores respectively.

ETFG Weekly Select List - the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

Since we’ve seen some major volatility within the financial sector the last week, we’d like to highlight some substantial movement when comparing this week’s Select List to last. The top three spots have completely changed hands. In order from 1st to 3rd, added to the list were First Trust Nasdaq Bank ETF (FTXO), Invesco KBW High Dividend Yield Financial ETF (KBWD) and Fidelity MSCI Financials Index ETF (FNCL). Also, notable movement was seen in the Technology sector where First Trust Nasdaq Semiconductor ETF (FTXL) moved to the 1st position and SPDR NYSE Technology ETF (XNTK) claimed 3rd, moving from second and fourth spots respectively.

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