Each week the analysts at DWA review and comment on all major asset classes in the global markets. Shown below is the summary or snapshot of the primary technical indicators we follow for multiple areas. Should there be changes mid-week we will certainly bring these to your attention via the report.

Observations:

• All major bullish percent (BP) indicators experienced a change this week. BPALL, BPOTC, and BPWORLD reversed down into a column of Os and now read 40%, 42%, and 44%, respectively. After falling lower to 40%, BPNYSE reversed back up into Xs and now reads 46%.
• Unlike the movement seen in the BP indicators, all major positive trend (PT) indicators remain unchanged in a column of Xs, each residing at the 30% level.
• All major HiLo indicators experienced a move south over the past week, as each reversed down into a column of Os. ALLHILO, NYSEHILO, and OTCHILO read 60%, 54%, and 64% now, respectively.
• All major ten-week indicators advanced over the past week. TWALL and TWNYSE reversed up into a column of Xs and read 70% and 72%, respectively. TWOTC and TWWORLD continued higher in a column of Xs and now read 70% and 62%, respectively.
• Two of the major thirty-week indicators moved higher last week. 30ALL and 30WORLD ticked higher to 26% and 24%, respectively; 30NYSE and 30OTC remain unchanged in a column of Xs at 18% and 30%, respectively.

Portfolio View - Major Market ETFs

Additional Comments:

It was a strong week across the board for the 10 major market funds covered in this report as all finished in positive territory. The leader of the week was the iShares S&P MidCap 400 Index Fund IJH, up 2.98% while the iShares MSCI EAFE ETF EFA lagged the group despite returning 0.95%. So far into 2020, the Invesco QQQ Trust QQQ is up 6.70%, making it the top-performing major market ETF in addition to the only fund in positive territory for the year. In fact, the second-best performing fund in our major market lineup is the Invesco S&P 500 Top 50 ETF XLG which is down -3.82% for the year, trailing the top-performing QQQ by over 10.50%!

So, what is causing this sizeable dispersion between these top two performing US large-cap funds? As we discussed in yesterday’s ETF Spotlight, so far in 2020 and throughout the COVID-19-induced sell-off and partial recovery, there has been a pronounced size and style bias within the US equity market in favor of large-cap stocks, particularly favoring large-cap growth over large-cap value. This can be seen through the Invesco S&P 500 Pure Growth ETF RPG’s year-to-date return of -4.68%, which is outperforming the Invesco S&P 500 Pure Value ETF RPV’s loss of -36.44% by 31.76% and the S&P 500 ETF Trust SPY’s return of -9.29% by 4.61%. When we take a closer look into the QQQ’s size and style breakdown, we find that it has a 54.9% large-cap growth overweight while 14.7% of the fund is allocated to large-cap value. On the other hand, XLG has a relatively lower large-cap growth weighting of 32.7% and a relatively higher large-cap value weighting of 32.7%, contributing to the fund’s underperformance relative to the tech-heavy QQQ despite holding 16 of the same stocks. QQQ’s superior strength is also reflected in its solid fund score of 5.40, which is outscoring the XLG’s current score of 5.17. Growth-oriented names, especially those focused in larger-capitalization companies, have continued to push the broader domestic equity market higher over the past few weeks, and their technical resilience reinforces their current positioning as market leaders heading towards the end of the first half of 2020. Now more than ever it is important to know what you own and how you own it.

SECTOR BULLISH PERCENT CHANGES

Average Level

44.17

WAST

oil

guti

TEXT

prot

comp

bank

FORE

tran

MEDI

HEAL

BIOM

INSU

oils

meta

busi

BUIL

soft

real

euti

REST

food

DRUG

PREC

semi

AERO

tele

MACH

RETA

wall

inet

HOUS

savi

STEE

fina

elec

CHEM

AUTO

LEIS

GAME

0-14

16-20

22-26

28-32

34-36

38-42

44-46

48-52

54-56

58-62

64-66

68-72

74-78

80-86

88-100

SECTOR INDICATOR CHART CHANGES

PT is the percentage of stocks within a sector that are trading above their bullish support lines. RSX is the percentage of stocks within a sector whose relative strength charts are in a column of Xs. RSP is the percentage of stocks within a sector whose relative strength charts are on a buy signal. The strongest sectors, i.e. market leaders, will have most of these indicators positive and moving higher in a column of Xs.

FAVORED SECTOR STATUS CHANGES
A sector is considered to be Favored if it has 3 or 4 of the sector indicators (Relative Strength, RSX, RSP, & PT) positive, Average if it has 2 of the 4 indicators positive, & Unfavored if it has 0 or 1 of the indicators positive. The table below contains those sectors that have experienced a Favored Sector Status change over the past week. It is best to focus on sectors that are about 50% or lower on their Bullish Percent charts & are in Xs. Note: If a sector moves from Favored to Average, it doesn't necessarily mean that the sector in question has to be sold - it just means you need to evaluate your individual positions with exposure to that sector. 

Favored		Average	Unfavored
4	3	2	1	0
	fina	FORE  prot	INSU  STEE  WAST  tran  MACH	savi  bank
4	3	2	1	0

Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market-moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@dorseywright.com.

Data represented in the table below is through 05/19/2020:

Broad Market Commodities Report

Portfolio View - Commodity Indices

While Gold Continuous GC/ has certainly captured the attention of commodity investors by returning 15.04% on a year-to-date basis and 36.89% over the past year, sister precious metal Silver Continuous SI/ has been making moves of its own over the past few weeks. In fact, silver investors have experienced massive gains of 44.22% in the past 60 days relative to gold’s 17.24% during the same period. Despite this notable rally, SI/ remains in the red on the year (as of 5/19) with a -0.10% loss. The 1-year return for silver is a more-respectable 19.60%, which is widely divergent from the broader commodity group’s return of -12.30% using the proxy of the WidomTree Continuous Commodity Index Fund GCC.

One way to capitalize on silver’s recent shine is by using the iShares Silver Trust SLV. The ETF seeks to track the day-to-day movement of the price of silver bullion and provides a liquid way to access the commodity’s exposure outside of the futures market. After declining significantly to move to a negative trend and multi-year low of $11 during the month of March, SLV has since rallied sharply to return to a buy signal and is currently testing its bearish resistance line at $16.25. This absolute improvement coupled with the relative outperformance of the underlying commodity has also helped propel SLV’s fund score to 3.78 on the back of a strong positive score direction of 1.77. Additionally, SLV’s 1-year performance of 19.60% places it in the top 4th performance percentile of all mutual funds and ETFs tracked on the Nasdaq Dorsey Wright platform. A further advance to $16.50 would reverse the trend for the fund and offer additional bullish confirmation. Note that SLV is heavily overbought at current levels and has the potential for initial support at $13.75.

An alternative way to mine the success of silver is by investing in the companies that extract the commodity from the ground. The iShares MSCI Global Silver Miners ETF SLVP provides such exposure and is trading in a positive trend on a fourth consecutive buy signal at a freshly-minted 52-week high of $13. This positive technical strength has resulted in a gain of 13.89% on the year, which has contributed to SLVP’s stellar fund score of 5.47 with an astonishingly-positive score direction of 5.00. Additionally, SLVP has recently experienced a flip to positive monthly momentum, suggesting the potential for further gains. Similar to SLV, the fund’s recent success has placed it in heavily overbought territory. Those seeking long exposure may be well served to wait for a pause or pullback noting that initial support is offered at $10.75. SLPV comes with a yield of 1.78%.