Monday, January 28, 2019

Back to Work....for 3 Weeks?

Monday, January 28, 2019 - After alternating between gains and losses, stocks ended the holiday-shortened week on a positive note driven by a stopgap deal to end the government shutdown for three weeks. To begin the week, waning global growth was the prevailing market concern and weighed on market sentiment. Downward revisions to the ECB's economic outlook and IMF's 2019 and 2020 global growth forecasts underscored this unease and helped put a halt to the largely strong stock performance since the beginning of the year. However, the rest of the week was devoid of any negative developments in some of the recent market overhangs, like adverse economic data releases, the U.S.-China trade dispute, or Brexit. The absence of any negative news help swing the balance of investor sentiment towards more positive developments, like strong Q4 earnings and a long-awaited end to the government shutdown. While stocks failed to post a fifth consecutive week of gains, they erased much of their initial losses and concluded the week with some momentum. At week's end, the S&P 500 was down 0.2%, while the DJIA and NASDAQ inched up 0.1% each.

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

ETFG Quant Winners: This week’s largest advance occurred in the ARK Web x.0 ETF (ARKW), gaining 9 points to end with a Quant score of 61.26. This is unsurprising, as technology was the best performing sector this week following a string of positive earnings releases and forward looking guidance. VanEck Vectors Semiconductor ETF (SMH) was another standout tech performer, rising 8.74 points. Other notable movers were several emerging market funds, like iShares Currency Hedged MSCI Emerging Markets (HEEM), iShares MSCI Thailand ETF (THD), and NuShares ESG Emerging Markets Equity ETF (NUEM).

ETFG Quant Losers: On the opposite side of the ledger, VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) experienced the largest quant loss, with a 8.02 point decline, perhaps reflecting the damaging ongoing trade tensions are inflicting on metals companies. The top 5 was rounded out by Invesco S&P 500 Equal Weight Energy ETF (RYE), John Hancock Multifactor Consumer Staples ETF (JHMS), Schwab US Broad Market ETF (SCHB), and iShares Global Telecom ETF (IXB).

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

In the upcoming week, investors will get a fresh look at the health of several technology giants, after Facebook, Apple, and Amazon report quarterly results. Given the outsize collective influence of these companies, their results will serve as a key barometer of the overall global economic growth picture.

Accordingly, we'd like to bring attention to the technology sector ETFs that currently boast the highest rankings according to our model. The First Trust Nasdaq Semiconductor ETF (FTXL) carries the top overall ranking, followed by iShares Exponential Technologies ETF (XT), SPDR FactSet Innovative Technology ETF (XITK), Global X FinTech Thematic ETF (FINX), and ALPS Disruptive Technologies ETF (DTEC). Due sizable exposures many of these ETFS have to the FAANG stocks, it will be interesting to monitor how the funds are impact by the results of this week's earnings reports.

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