There is a change to the iShares Sector Rotation Model ISHRSECT this week: buy the iShares US Energy ETF IYE. 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. When an addition or deletion is made, the portfolio is rebalanced so each position is equally weighted. IYE was added to the portfolio because it reversed up into a column of Xs on its relative strength chart against IYY, demonstrating short-term relative strength. This is the 12th change to the model this year.

Year-to-date (through 11/25), ISHRSECT has generated a price return of 15.72%, outpacing the S&P 500 SPX by around 3.4%.  The model now has exposure to nine ETFs, which are shown below.

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

92.96

											ewt
											ewd
											erus
											IYJ
											emif
											ign
											igf
											dvy
											IJH
											ige
											eems
											ewu
											ezu
											ewk
											ewh
											ITA
											iat
											iyg
											eww
											iak
											exi
											efa
											ilf
											ewq
										iyz	ieo
										wood	ewy
										ewz	ewi
										tur	IJR
									IVV	ech	ewa
									bkf	ewn	iez
									fxi	enzl	thd
									ewm	mxi	ewj
									iym	iyk	epp
									iyt	ICLN	eufn
									IYY	epu	IAI
							IHE		eza	indy	ixc
							icf		ixp	eem	ews
						IHI	IGV	kxi	SOXX	eis	eido
						ITB	idu	ihf	gsg	RXI	ixg
						IBB	ewl	ewg	epol	ewc	ewp
		IAU		SLV		IXJ	IXN	jxi	IYC	iev	ewo
<--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: ISHRSECT: buy the iShares US Energy ETF IYE