Strong Employment is the Driver

Monday, December 9, 2019 - After what looked to be a tough week for the markets amid President Trump’s comments that it may be late 2020 before we can establish a trade accord with China, Friday’s job report erased most of the mess created. The market rallied back from its losses for the first week of December.

The Department of Labor announced employment numbers for the month of November and they greatly exceeded the expectation of 100,000 jobs created. The report revealed there were 266,000 jobs created in the month. Following suit, the markets immediately made up any ground that was lost in the beginning of the week and the major indexes finished as follow: The Dow Jones finished slightly down for the week, but it jumped from 27,677.79 on Thursday’s close to 28,010.87 on Friday’s close. The S&P 500 was up slightly for the week, as it opened at 3,140.53 on Monday and closed at 3,145.88 on Friday. Lastly, the Nasdaq Composite finished slightly lower as well, opening at 8,659.15 and closing at 8,656.53 on Friday. Considering where these indexes were, following Thursday’s close, investors seem to be thrilled about the markets following the job report.

On to the ETFG Quant Movers report this week, we will look at our 5 biggest % Gainers and % Losers. For % Gainers, our top five winners this week were IBB, SLYV, AADR, SLY and MDYG. They jumped 102.49%, 96.75%, 88.35%, 87.86% and 81.71% respectively. SLYV and SLY are ETFs that track the S&P Small Cap 600 Value Index, which is consistent with the strong showing the small cap industry has had over the past few months. Overall, when looking at small cap indexes such as the S&P 600 or the Russell 2000, we saw that on Friday they both neared 52-week highs, showing us that small cap has been enjoying a strong year, and possibly poised for a 2020 breakout.

Our top 5 ETFG Quant losers this week were SPFF, MLPC, MLPY, WBIG, PGX. They went down 39.75%, 34.22, 30.70, 30.52, 30.42 respectively. Two of these, MLPC and MLPY, track Master Limited Partnerships (MLPs) which mainly deal with transporting and storing natural resources such as gas or oil. Our model picked up that MLPs are continuing to have a rough year and it was no different this week. Midstream MLPs have been suffering from multiple factors this year, (one being lower demand for oil and gas, which we noted in our blog last week that news of a warm Winter is playing a factor in this as of late) and we are seeing record lows across the board, nearing 10% YTD drops.

Finally, we move on to the ETFG weekly select list. Comparing this week’s select list with last week’s, we will check 5 of the biggest positive movers this week in the Geography sector, all of which may offer upside potential. We see the top 5 ETFs to choose in this sector based on the list are: KGRN, IEUR, IVAL, SLY, and ILF.

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