There is a change to the iShares Sector Rotation Model ISHRSECT this week: sell the iShares Cohen & Steers Realty ETF ICF. ISHRSECT utilizes a relative strength versus benchmark methodology which compares each of the funds in the model universe against the iShares Dow Jones US ETF IYY. Those funds showing near-term relative strength against the benchmark (i.e. are in a column of Xs) are included in the portfolio and are removed only when they show weakness relative to the benchmark (i.e. reverse down into a column of Os). When an addition or deletion is made, the portfolio is rebalanced so each position is equally weighted. ICF was removed the portfolio because it reversed down into a column of Os on its relative strength chart against IYY, demonstrating short-term relative weakness.  

ICF reached a recent high of $104 in last month’s trading, where it failed to break through its bearish resistance line and reversed down. In trading earlier this week, the fund gave a second consecutive sell signal when it broke a triple bottom at $93. ICF currently has an unfavorable 0.69 fund score and –3.73 fund score direction.  

Year-to-date (through 5/13) ISHRSECT has returned –9.27%, outpacing the S&P 500 SPX which is down –12.71%. With the removal of ICF, the model now has exposure to 11 iShares sector and subsector ETFs which are shown below. This is the sixth change to the model this year. 

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 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 with an "average level" to give us a general picture of whether the iShare ETF universe is generally overbought on a near-term basis, or generally oversold. Our best opportunities are to buy strong market 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. The Distribution Curve below displays those ETFs with positive RS in uppercase letters and those ETFs with poor RS versus the market in lowercase letters. As well, those ETFs that are on a Point & Figure Buy signal appear in Green letters, while those on Sell signals can appear in Red letters. Box Color indicates the Sector Status Rating. Green = Favored, Yellow = Average, and Red = Unfavored.

Average Level

1.75

						IJH
						IAI
						epu
						erus
					emif	kxi
					ewq	ign
					jxi	ewg
					iyg	iyk
					eww	itb
					igf	ewd
					iyt	ewc
					iez	eems
					tur	efa
					IJR	eem
					eido	bkf
					iyz	ewy
					exi	icln
					ewk	fxi
					epol	ieo
					ezu	enzl
					ewo	IVV
					IYJ	ewl
				iak	ech	IYY
				ilf	ewu	ige	ewj
				iat	ews	ihf	eis
				ITA	ewa	iym	thd
				icf	wood	RXI	IHI
				ewp	eza	ewm	IAU
				eufn	epp	IYC	IXN
				ixg	ixc	mxi	ixp
				ewi	indy	ewn	ewt
			gsg	dvy	iev	slv	IXJ
			ewz	idu	ewh	SOXX	IHE	IGV	IBB
<--100	-100--80	-80--60	-60--40	-40--20	-20-0	0-20	20-40	40-60	60-80	80-100	100->

This section of the report categorizes select iShares 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 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.

Weekly Updates: iShares Sector Rotation Model ISHRSECT this week: sell the iShares Cohen & Steers Realty ETF ICF.