There was no change to the Franklin International Rotation Model this week.

Growth areas of the market continue to push domestic equities higher this year, and the group displays long-term relative strength over more value-oriented areas. Within growth focused areas, the technology sector has seen one of the sharpest rises in strength, with the sector rising back to the top three of DALI’s sector ranks. Those looking to add exposure to more technology and other growth focused areas could look towards the Franklin Intelligent Machines ETF (IQM). The ETF has a near perfect fund score of 5.79, in addition to a sharply positive score direction of 4.45 points. IQM returned to a positive trend in May and is on a streak of three consecutive buy signals. The fund also holds both long-term and near-term relative strength versus the market (SPXEWI). IQM has outpaced the S&P 500 (SPX) each of the last two years, rising 31.0% and 41.1% in 2023 and 2024, respectively. IQM is off to another strong start for the year, as it is up 20.2% year to date, which is almost 10% more than the S&P 500. Long exposure could be added here given its actionable positioning with an overbought/oversold (OBOS) reading below 60%. Initial support lies at $78 to $77 with additional support at $68. Meanwhile, previous resistance in the low $70s could also serve as future bounce points.

This section of the report categorizes select Franklin ETFs by their respective broad group. Along with each group, you can view the Average Group Score, which is an average of the scores of all funds represented in that particular group. Those Franklin ETFs that meet or exceed the Average Group Score will be highlighted in green in order to easily view those ETFs that have superior strength within their respective group. You want to focus on those ETFs that exhibit superior strength when looking to add new exposure to a particular group.

The distribution curve places each ETF on a bell curve according to their respective degrees of overbought or oversold status using a 10-week distribution. ETFs that are statistically oversold will appear on the left-hand side of the bell curve, while those that have become statistically overbought will appear on the right-hand side of the bell curve. Perhaps the most useful attribute of this feature is that it displays the entire universe on the curve at one time to give us a general picture of whether the Franklin ETF universe is generally overbought on a near-term basis, or generally oversold. Our best opportunities are to buy strong relative strength ETFs that have regressed back toward mean conditions based on market weakness, or have become oversold based upon extreme market weakness. Weekly Distribution is a short-term gauge that is most helpful in timing entry and exit points, while the longer-term information of trend and relative strength is a more controlling factor in the decision of whether to buy or sell.

Legend:

• UPPERCASE indicates that the RS chart is on a buy signal.
• lowercase indicates that the RS chart is in a sell signal.
• GREEN lettering indicates the ETFs trend chart is on a buy signal.
• RED lettering indicates the ETF is on a sell signal.
• Box Color indicates the Sector Status Rating. Green = Favored, Yellow = Average, and Red = Unfavored.

The Franklin LibertyShares International Model is designed to identify major country and regional themes in the international marketplace through the use of the Point & Figure relative strength tools. For more information on the portfolio construction and back testing, see the model info file on the models page.  (Note: The Franklin LibertyShares ETF Models will be updated Thursday mornings by 9:30 am EST) 

Weekly Changes: 

* - Dates prior to 09/01/2018, which is when the Franklin LibertyShares ETF Model became available on the NDW Research Platform, are representative of when the position was added to the backtested model.