" have a new model in which we track the relative strength of the various ETFs representing the economy of the entire world. I will be publishing this once a month. Ken Long, who developed the algorithm we use, publishes a similar report every weekend at www.TortoiseCapital.com. If you’d like more information, then I’d suggest you attend our ETF workshop, which is held several times each year. Ken explains how these numbers are derived in this workshop.
The areas in green are stronger (the total rating is at least one standard deviation above the mean); those in yellow are the next strongest (above the mean). Those below the mean are in brown; and those more than one standard deviation below the mean are in red. I’ve also taken all of the double leveraged funds out of my database, which means that the top and bottom funds are not devoted entirely to those groups.
By the way, if you didn’t read my article on GLD last month, then please take a look at it. ETFs have some additional risks that the underlying instrument doesn’t have, just like mutual funds have risks that the stocks they own do not have. Namely, the instrument you are trading could fail (and cost you extra money), while the underlying trading instrument (i.e., gold) could be doing fine. In fact, I find that each month some company is closing down a set of ETFs, and I have to eliminate them from the ETF database that generates these charts. I think funds are being eliminated now faster than they are added. And what happens if an ETF that you own is taken off the market?"
This world view continues to look better with a number of areas (other than the U.S.) starting to turn green. However, I’ve taken out the double leveraged funds, and right now the only reading above 60 is Russia (and that’s just because of recent strength, not long term strength). South Korea is at 56 and South Africa is at 57.
The next part of the chart shows commodities, real estate, and interest rate products, along with the top and bottom 15 ETFs. As I said, I’ve taken out the double leveraged funds so that we have a better example of the overall world picture.
The Strongest Areas:
1) Russia
2) Copper (JJC)
3) Gold Mining Stocks (GDX)
4) Oil (DBO, USO, and OIL)
5) South Africa (EZA)
6) South Korea (EWY)
7) Asia (less Japan)
8) Broadband
The Weakest Areas:
1) REITs (RWR)
2) Realty Majors (ICF)
3) Vanguard REITS (VNQ)
4) Real Estate 50 (FTY)
5) US Real Estate (IYR)
The overall picture of what is really weak is clear. The bottom 8 all have to do with real estate until we get to 9 and 10, which are related to health care.
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