Although they often move in opposite directions, commodities and the U.S. dollar posted above-average positive returns this past week. Crude oil is trading back above $51, erasing about half of its March freefall and boosting Energy ETFs. The dollar’s strength created headwinds for international ETFs, but many still managed to post gains.
Sectors: The Sector Benchmark ETFs reduced the spread in momentum scores this week, dropping from a 49-point top-to-bottom difference a week ago to a 32-point spread today. Although there was a significant reduction, the spread still remains large, which means investors are being rewarded for being in the right sectors. Most of the change was a result of good bounces from the oversold sectors of Telecom, Energy, and Real Estate. The gains for Real Estate pushed it back into the green, while Telecom and Energy ETFs were able to eliminate the majority of their negative momentum. Technology is at the top for a fourth week, and Utilities sits in second. Consumer Discretionary moved ahead of Health Care, while Consumer Staples slipped below Materials.
Factors: All of the Factor Benchmark ETFs are now in the green as High Beta shook off its negative momentum. The gains for High Beta also pulled it off the bottom of the rankings and pushed it three spots higher to eighth. As a result, Value is now on the bottom after gracing the top-ranked spot just five weeks ago. Factor rotation is indeed at work. Momentum is at the top of the list for a fourth week, and it has now expanded its margin over the other factors. Low Volatility, last week’s second-place occupant has slipped to third, with Growth moving up to fill the void. Quality also fell in the rankings, but it managed to keep itself in the upper half.
Global: The Eurozone was able to hold the top spot for only one week and had to settle for the second-place position this week. Latin America’s larger-than-average volatility is currently enhancing an upside price move for the region, propelling it from sixth to first in the rankings of the Global Benchmark ETFs. The jump caused Emerging Markets, China, and EAFE to join the Eurozone in losing ground in the rankings. The U.S. managed to post its first rise in the rankings in a number of weeks, aided by strength in the U.S. dollar. However, it is nothing to get excited about yet, as the single-place improvement leaves only Japan and Canada below the U.S. this week.
The following Edge Charts are market momentum snapshots. They provide a quick and easy way to help you visually get a handle on the overall state of the market. With these charts, you can assess both the relative strength and absolute strength (momentum) of more than 30 global equity market segments. Please refer to the Edge Chart User’s Guide for further explanation.
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.