There are changes to the First Trust Sector and Thematic Focus Five Models this week.
First Trust Sector Model
The change to the First Trust Sector Model (FTRUST) involves the addition of the First Trust Nasdaq Pharmaceuticals ETF (FTXH). Recall the First Trust Sector Model utilizes an RS versus benchmark methodology, as opposed to an RS matrix of the model’s full ETF lineup. The First Trust Sector Model’s process compares each of the funds in the model’s universe to the S&P 500 Index (SPX) on a 6.5% scale RS chart. If the RS chart resides in a column of Xs, the ETF is included in the model’s holdings, while an RS chart residing in a column of Os warrants the fund’s exclusion.
Following Wednesday’s (2/4) action, the RS chart comparing FTXH to SPX reversed into a column of Xs after having been in Os since June 2023. FTXH has a strong fund score of 4.71 with the fund maintaining a positive trend on the default point and figure chart and positive near-term market RS since October last year. More recent action has brought the fund above $35, a new all-time chart high. With the addition of FTXH, the First Trust Sector Model will rebalance with eight holdings to equally weight at 11.11% and continues to maintain an overweight toward technology and healthcare.
First Trust Thematic Focus Five Model (Total Return)
The change to the First Trust Thematic Focus Five Model (FTTHEME5.TR) this week involves the removal of the First Trust Dow Jones Internet Index Fund (FDN.TR) as it fell below the sell threshold within the model’s total return relative strength matrix. In its place, the Model is adding the First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index Fund (GRID.TR).
GRID has maintained a positive trend on the default point and figure trend chart since April of last year and currently shows positive near and long-term relative strength against the market, leading the ETF to sustain strong fund score of 5.81. With the change, the model will rebalance the five holdings to equally weighted at 20% and will now maintain exposure to the S-Network Streaming and Gaming (BNGE.TR), Clean Energy (QCLN.TR), Transaction & Processing (LEGR.TR), NextG (communications) (NXTG.TR), and Smart Grid Infrastructure (GRID.TR).
