Monday, August 24, 2020

Big Tech Ignores Dog Days of Summer

Monday, August 24. 2020 - This week, we saw yet another amazing rally from the US technology giants, continuing what has been a monstrous quarter from this industry throughout the COVID pandemic. On the week-end close, we saw the S&P 500 close at an all time high of 3,397.16 this week, which was a .72% weekly gain. The Nasdaq Composite closed at 11,311.80, which was a 2.65% weekly gain. Finally, the Dow Jones finished this week at 27,930.33, which was a 0% gain.

Tech giants, mainly Apple and Tesla, are a big reason we saw positive performance in the above indices, as Apple closed with a whopping $2 trillion valuation, separating itself as the clear-cut, most valuable US stock. Likewise, since Tesla’s stock split announcement on August 11th, the stock has gained nearly 50% in value. Apple’s weekly gain of 5.15% and Tesla’s weekly gain of 2.41% were big reasons the S&P and Nasdaq performed well. The question now becomes, how much longer can big tech hold up the economy before the other industries are able to catch up? The three major indices would tell you that our economy has recovered well from the Coronavirus thus far, but this is a bit narrow as big tech is dominating these results by having such towering performances over the past few months, leaving other industries, such as the travel industry, unrecovered and in the shadows of FAANG and its contemporaries.

ETFG Quant Movers - The ETFs that had the largest weekly change in their respective, overall ETFG Quant ratings. We look at this week’s top 5% Gainers and % Losers in the ETF universe.

ETFG Quant Winners: On the % Gainers side, we have PNQI, LDRS, JKD, JPLS, SKYY, posting 35.71%, 31.29%, 29.12%, 28.52%, and 27.16% respectively. A common theme in these ETFs are that they either focus on US tech/internet stocks (such as PNQI and SKYY) or US Large-Cap stocks, such as JKD and LDRS. Since these companies led the way this past week in the economy, it makes sense as to why they came out on top in our daily updated ETFG Quant model.

ETFG Quant Losers: On the % Losers side, we have FNDE, PWV, EDIV, QDEF and FGD. They posted weekly losses of -25.99%, -20.44%, -20.02%, -19.82% and -19.80% respectively. A common theme on this side shows us 4 of the 5 ETFs either aim to follow an Emerging Markets Index or a Dividend Index. What our model could be telling us, at least terms of the Emerging Markets ETFs, is that the world economy is still getting hit from the Coronavirus and while big tech has been able to carry the US economy during this time, smaller countries are not so fortunate.

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

Finally, we will look at the ETFG Weekly Select List. We will be comparing last week’s list to this week, seeing which ETFs made the largest moves. Our focus today is on ‘Geography’. IJS (iShares S&P Small-Cap 600 Value ETF) made a huge move from 5th place the previous week to 1st place this week in the ‘North America’ sub-region. ICOL (iShares MSCI Colombia Capped ETF) made a move from 2nd place to 1st place in the ‘Emerging Markets’ sub-region. And lastly IPFF (iShares International Preferred Stock ETF) went from being unranked the previous week to 2nd place in the ‘Developed Markets’ sub-region.

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