The iShares MSCI Canada ETF (EWC) asserts its leadership role as it and other resource-rich countries gain strength. Changes in the sector rankings play into the resource theme as Materials climbs to third.
Sectors: The majority of the sector benchmark ETFs lost momentum, although it was nearly even, with five showing improvement while six weakened. Health Care posted the best improvement, climbed three steps out of the basement, and moved into a positive intermediate-term trend. Other sectors with improved relative-strength rankings included Materials, Technology, and Consumer Discretionary. The moves by Materials and Technology placed each back into the top five, and Energy’s drop from third to sixth place made it possible. Utilities had a noticeable drop as it fell three spots to 10th. Consumer Staples replaced Health Care on the bottom, and Financials extended its time at the top to 10 weeks.
Factors: Only small changes among the factor benchmark ETFs are visible this week. The top five of High Beta, Small Size, Value, Fundamental, and Market Cap have been firmly entrenched for four weeks. Allowing for some minor position changes, this group of five have been in control of the factor rankings for the past nine weeks. This week’s changes included Quality moving two steps higher to sixth, with Yield performing the opposite feat. Another change was Momentum’s escape from last place by pushing Low Volatility and Growth lower. Although the mathematical algorithm forces each category into a specific position in the relative-strength rankings, the chart below indicates that the bottom-four categories are in a near-tie for last place.
Global: All global categories gained momentum, pulling the bottom four out of the red. Resource-rich regions made the largest gains, as Pacific ex-Japan zoomed five places higher and Canada secured the leadership position. Aided by recent strength in the Materials sector, gold, and their local currencies, the Australia-Brazil-Canada (“ABC”) posted significant gains. While iShares MSCI Australia (EWA) and iShares MSCI Brazil (EWZ) are not directly represented in the global categories, they do hold the dominant allocations within the Pacific ex-Japan and Latin America benchmarks. Canada’s ascension caused the U.S. to slip down to third, but the U.S. remains firmly in the hunt. On a relative-strength basis, the U.K. dropped four places to ninth despite increasing its momentum reading. China posted the largest improvement in momentum, but it wasn’t enough to move it out of last place.
Disclosure: Author has no positions in any of the securities mentioned and no positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) is received from, or on behalf of, any of the companies or ETF sponsors mentioned.