As reported in Wednesday's Fixed Income Update, we have recently seen upward movement in interest rates, meanwhile the NYCE US Dollar Spot Index DX/Y, broke a triple top, returning to a buy signal for the first time in more than a year. As a result, we have seen deterioration across many segments of fixed income. Within the Asset Class Group Scores, aside from the Inverse-Fixed Income group, there are only three other groups with average scores above 3.0, one of which is Convertible Bonds.

Those who are considering adjusting a fixed income allocation in light of these trends, may wish to consider the iShares Convertible Bond ETF ICVT. ICVT has given four consecutive buy signals dating back to 2016, most recently breaking a double top on 3/9/18.  ICVT offers a fund score of 3.15 and a yield of 2.27%; the fund has three nearby support levels at $55, $54, and $53. 

There are no changes to any of the iShares models this week. We wanted to take this opportunity to alert you to some upcoming changes to the iShares models lineup and the weekly iShares reports.  First, the iShares Alternative Report and iShares Equity Report will be consolidated into a single, all-encompassing iShares report, the “iShares ETF Report”. Additionally, the models will be streamlined and reduced to four models that can be seen as the essential portfolio building blocks. The inventories of the remaining models are currently going through an evaluation to determine if there are ways to expand coverage within the model’s asset class. The models that will remain are:

• The iShares Fixed Income Model ISHRFIXED;
• The iShares Sector Rotation Model ISHRSECT;
• The iShares International Model ISHRINTL; and
• The iShares Tactical Model ISHRTACTICAL.

The models that will no longer be available are:

• The iShares Alternatives Model ISHRALT;
• The iShares Developed Market Model ISHRDEV;
• The iShares Emerging Market Model ISHREMERG;
• The iShares Income Model ISHRINCOME;
• The iShares Sector Six Model ISHRSECT6; and
• The iShares Smart Beta Model ISHRSMART.

This section of the report categorizes select iShares Fixed Income and Currency ETPs by their respective fund groups. 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 iShares 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 DWA Matrix uses a Point & Figure relative strength comparison of each index to one another to identify the strongest and the weakest among the universe used. The ETFs with the most relative strength buy signals (suggesting outperformance) versus the others in the group are listed at the top. These ETFs should be overweighted in the portfolio. Those ETFs with the least amount of relative strength buy signals versus the others in the group are listed at the bottom. These ETFs should be underweighted in the portfolio.

Weekly Updates: