The defensive posture taken by Sabrient’s fundamentals-based SectorCast-ETF model has allowed the long/short model portfolio to prosper in the face of the market weakness we’ve seen over the past week. The formerly hot Materials sector had begun to show signs of cooling off last week even as the overall market was hitting new highs, and over the past week it fell hard.
Perhaps it was the new senator from Massachusetts who let the bears out, but I suppose it was a bit more than that. When the week began on Tuesday, after the Martin Luther King holiday, the bulls were grazing happily on GARP stocks, as contented as California cows. But then somebody opened that gate, and the bears roared through and the bulls ran for cover.
Several comments to this week’s article on SeekingAlpha (“What the Market Wants: A Week of Murk and Fog”) have prompted me to make a few points of clarification.
Last week brought us murk and fog in an otherwise bright New Year. All style/caps were down for the week, though not drastically. The worst was Small-cap Growth (- 1.12%); the best was Large-cap Growth (-0.6%); and the rest crowded between these uninspiring returns. But given the tremendous amount of cash on the sidelines, the market seems unlikely to turn disastrous.
The Claymore/Sabrient Insider ETF (NFO) has come to the attention of the ETF Professor after receiving the prestigous four-star rating from Morningstar:
Two exchange-traded funds that track Sabrient quantitative indexes passed their 3-year anniversaries in late 2009 and received prestigious 4-STAR Morningstar ratings.
The Claymore/Sabrient Insider ETF (NYSE Arca: NFO) and the Claymore/Sabrient Defensive Equity ETF (NYSE Arca: DEF) track the Sabrient Insider Sentiment Index (SBRIN) and Sabrient Defensive Equity Index (SBRDE), respectively.
Stocks came strongly out of the gate last Monday to kick off the 2010 Wall Street race. And indeed the market advanced throughout the week, albeit fitfully, with the S&P 500 starting the week at 1114 and closing at 1144. So let's recap last week's market data for some insight on where we should be looking to invest now.
As we close out a tumultuous year that took us from the depths of fear about the future of capitalism as we know it, to the heights of optimism, we enter 2010 with a cautious but hopeful view that the next shoe to drop—whatever it might be—will not lead to another maelstrom.
Although the market is flashing signs of a strong breakout for the New Year, Sabrient’s SectorCast-ETF model continues to flash defensive signals. Given the quantitative model’s reliance on value-based fundamentals, this shouldn’t be surprising after such a lengthy and sustained rally. This week, there are few changes to the sector rankings. Most notable is the continued rise in Energy, which now scores a 62 but hasn’t yet cracked the Top 2.
It seems that we needed only to take a week off to get this market going. Our last issue was barely published when the market broke through the 1100 heavy resistance it had faced for nearly two months. The S&P 500 closed today (Monday) at 1133, up a solid 3% since two weeks ago. Small-cap Growth led the cap/styles this past week, up +1.66% while Large-cap Value was the worst at +0.32%.
The Claymore/Sabrient Insider ETF (NFO) racks up another accolade, this one from Michael Johnston at ETFdb.com. He talks about the expansion of ETFs from a "closet industry" five years ago to an investment option for mainstream investors and about the growing number of quant-based funds:
Perhaps it was the new senator from Massachusetts who let the bears out, but I suppose it was a bit more than that. When the week began on Tuesday, after the Martin Luther King holiday, the bulls were grazing happily on GARP stocks, as contented as California cows. But then somebody opened that gate, and the bears roared through and the bulls ran for cover.