Monday, January 13, 2020

Settled Tensions Lead to Strong Rise

Monday, January 13, 2020 – U.S. stocks scored a solid weekly gain in the first full week of trading for 2020. The large cap indexes pushed further into record territory, as the prospects for armed conflict between the U.S. and Iran appeared to diminish. Last week we saw the Dow Jones Industrial Average flirt with an all-time high of 29,000 but later fell 133 points (0.5%) to 28,824 on Friday. For the week, the Dow was up 0.7%, the S&P 500 rose 1.0% and the NASDAQ rose 1.8%.

The technology sector outperformed, led by continued strength in Apple (AAPL) following a report of strong sales in China. A sharp rise in the stock price of cloud software firm (CRM) also contributed to the sector’s success. The stabilizing situation in the Middle East reversed the previous week’s spike in oil prices and weighed on energy shares. As a result, oil declined 6% on the week. The small cap benchmarks also lagged and recorded modest losses for the week. In addition, a host of relatively favorable reports on activity in the global services sectors also likely delivered some support and helped the markets shrug off Friday's weaker than expected U.S. labor report.

In ETFs, 2020 kicked off with great inflows continuing a trend from the previous year. In total, last week registered over $15 billion in new assets. Sector based ETFs topped the list of weekly inflows. The Industrial Select Sector SPDR Fund (XLI), the Consumer Discretionary Select Sector SPDR Fund (XLY) and the Financial Select Sector SPDR Fund (XLF) each made the list bringing in approximately a billion dollars in flows a piece. On the other hand, SPDR S&P 500 ETF Trust (SPY) saw an outflow of over $1 billion while SPDR Gold Trust (GLD) and iShares Russell 2000 ETF (IWM) lost over $600 million in AUM.

ETFG Quant Movers - Those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings.

ETFG Quant Winners: The top five gainers in Quant Total Score were AdvisorShares Vice ETF (ACT), SPDR S&P Health Care Services ETF (XHS), iShares U.S. Healthcare Providers ETF (IHF), The Obesity ETF (SLIM) and SPDR S&P Fossil Fuel Reserves Free ETF (SPYX) respectively. Each ETP added well over 10% to their overall Quant.

ETFG Quant Losers: Honorable mentions in the loser category were First Trust Developed Markets ex-US Small Cap AlphaDEX Fund (FDTS), Sprott Gold Miners ETF (SGDM), WisdomTree India Earnings Fund (EPI), iShares MSCI United Kingdom Small-Cap ETF (EWUS) and Global X MSCI SuperDividend EAFE ETF (EFAS). The reasons for the drop in quant scores can be traced to global themes and behavioral factors.

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

Considering the sector’s success, we’d like to highlight the top ETFs within the Technology sector in this week’s Select List. ALPS Disruptive Technologies ETF (DTEC) moved from the 5th position to claim 1st followed by Global X MSCI China Information Technology ETF (CHIK) holding on to 2nd. Newcomers to this week’s Select List were Global X E-Commerce ETF (EBIZ) in 3rd, KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ) in 4th and iShares Exponential Technologies ETF (XT).

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