Utilities tops the sector rankings, but it was the Real Estate ETFs making the largest upside move. Financials, the prime post-election beneficiary has run out of gas. Momentum continues to lead the factors scorecard, and a three-way tie has developed among the global categories.
Sectors: Utilities claimed the top ranking among the Sector Benchmark ETFs. It had been lurking in the second-place spot for the preceding three weeks and reached the pinnacle today. However, the momentum scores reveal that this new achievement was not so much the result of strength in Utilities as it was weakness in Technology. Both sectors lost momentum this past week, but Technology lost more, causing it to relinquish the top spot and slide down to second. Real Estate was the big upside mover, jumping four spots higher to claim the fourth-place position. Health Care was the largest downside mover, falling from fourth to seventh. Telecom had a good week, moving from red to green and climbing a notch higher. Financials went the other direction, losing the last of its positive momentum and slipping lower in the rankings. The election boost for Financials appears to be out of gas. The momentum scores continue to become more compressed, which often precedes and precipitates large changes in the relative-strength rankings. The 49-point spread of two weeks ago was down to 32 points last week, and there is just a 20-point difference from top to bottom today.
Factors: Momentum is in the driver’s seat for a fifth consecutive week. The rapid factor rotation of late February and early March appears to have stabilized for now. Low Volatility was the ruling factor for most of 2015 and early 2016 but fell out of favor in the last half of 2016. It moved back into the upper half of the Factor Benchmark ETF rankings five weeks ago and sits in second place today. Growth slipped to third and now sits just below Low Volatility. High Beta continued to recover from the two-week plunge that took it from first to last in late February. Last week’s rise off the bottom to claim eighth place was followed by another two-spot rise today. High Beta and Value were the only two factors gaining momentum over the past week, but Value remains on the bottom.
Global: There is a virtual three-way tie for first place among the Global Benchmark ETFs. Latin America, Eurozone, and Pacific ex-Japan all posted momentum scores of 21 today. China is close to making it a four-way tie, but this is not necessarily a four-way show of strength. They all got this way by losing momentum, some more than others. Latin America lost 9 momentum points, Eurozone gave up 7, China declined 5, while Pacific ex-Japan held its loss to just 3 points. If this short-term trend persists, the relative-strength rankings are going to look much different the next couple of weeks. Canada was the only global category to increase its momentum this week, and its reward was a move up and out of last place. Japan fell a notch and is now at the bottom.
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.