Monday, September 28, 2020 - The S&P 500 finished down .63% while the Nasdaq Composite finished up by 1.11% on a strong Friday rally by the WFH stocks. The broad market as measured by the S&P 500 closed the week at 3,298.46. The NASDAQ Composite closed 10,913.56. The failure of congressional and administration negotiations to pass another round of stimulus by the Congress thru Friday did not help support the market, however weekend discussions on a leaner stimulus package will provide support to US equities if a deal is reached this week. Neither Party wants to be responsible for a bear market before the election.
The NASDAQ Composite broke its 4 week selloff Friday while the S&P 500 and Russell 2000 continued their downward trends. “Work from Home” themed stocks rose on reports that the Covid 19 virus was sweeping thru Europe in a strong second wave, leading to new lockdowns in the UK and other nations. Violent protests erupted against new lockdowns across Europe. Declining prices in Value Stocks such as Industrials, Energy (Oil and Gas), Financials and Basic Materials pushed down the broad-based indexes for a 4th straight week, resulting in indexes flirting with correction territory. Energy stocks took the prize, losing approximately 8.4% over the week. We still believe that given the strength in the IPO market, this weakness represents a correction in the bull market. A vaccine cannot come fast enough for investors and businesses.
All these issues got us thinking on how far the correction could go? Apparently, further as some brokerage firms increased customer margin requirements Friday. Last week, High Yield spreads widened over Investment Grade by 40 bps in an apparent sign that investors are concerned about a slowing economy and weaker corporate cash flows. The much-hyped notion of a V Shaped Recovery appears to have been replaced by the K Shaped narrative. Virus resurgence, a contested November election and a stalled economy resulted in investors repricing risk assets in September. Given the upcoming elections in November, investors and traders should be especially ready to take advantage of volatility on both the down and upside.
As of early Monday morning, most overseas markets are up. However, investors will be focusing on continued weakness of oil prices and concerns that the virus resurgence will continue to weaken the global economy and resulting social instability. There are many ETFs which track risk assets. These can be found in our ETFG Screener and the ETFG Weekly Select List.
To best support the ETF selection process, The ETFG Weekly Select List highlights the 5 most highly rated ETFs per Sector, Geographic Region, Theme, and Strategy as ranked by the ETFG Quant model.
We suggest keeping a mindful eye on tools like our Select List and Risk and Reward Ratings that can be used to evaluate the vast set of opportunities in the ETF marketplace. Today’s market realities require a new approach to macro investing, one in which individual investors now have access to tools via ETPs to customize risk and return profiles in their portfolios. Use our Scanner to find those funds.
Thank you for reading the ETF Global Perspectives!
ETFG 21 Day Free Trial: https://www.etfg.com/signup/quick
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.
In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.
ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision. ETFG’s opinions and analyses do not address the suitability of any security. ETFG does not act as a fiduciary or an investment advisor. While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested. Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate. Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income.