There are changes to three iShares models this week. The iShares International Model (ISHRINTL) sold the iShares MSCI Brazil ETF (EWZ) and bought the iShares MSCI Taiwan ETF (EWT). EWZ was sold because its rank in the model’s relative strength matrix fell below the threshold to remain a holding in the portfolio. In its place, the model added EWT as it was the highest-ranking fund in the matrix that was not already a model holding. EWT currently has a near-perfect 5.98 fund score, which is 1.62 points better than the average for all non-US equity funds, and a positive 2.43 score direction.  On its default chart, EWT has completed five consecutive buy signals and reached an all-time high earlier this month. Year-to-date (through 6/24), the fund has gained 64.84% on a price return basis. In addition to EWT, ISHRINTL also has exposure to Israel, Italy, Peru, and South Korea. Year-to-date, the model has gained 23.92%.

The iShares Sector Rotation Model (ISHRSECT) sold the iShares North American Natural Resources ETF (IGE). ISHRSECT utilizes a relative strength versus benchmark methodology which compares each fund 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.

IGE was sold because it reversed down into a column Os on its RS chart versus IYY, demonstrating short-term weakness against the benchmark. With the removal of IGE, the model now has exposure to biotech, technology, software, semiconductors, basic materials, digital infrastructure & real estate, and telecom. Year-to-date, the model has gained 15.59%.

The iShares Tactical Model (ISHRTACTICAL) sold the iShares US Oil Equipment & Services ETF (IEZ) and bought the iShares US Telecom ETF (IYZ). IEZ was sold because its rank in the model’s relative strength matrix fell below the threshold to remain a holding in the portfolio. In its place the model added IYZ as it was the highest-ranking fund in the matrix that was not already a holding in the model. IYZ currently has a favorable 4.24 fund score, which is 0.30 points better than the average for all technology & communications funds. Year-to-date, the fund has gained 22.42%.

In addition to IYZ, the model also has exposure to software, the S&P 500, semiconductors, aerospace & defense, US broker dealers & securities exchanges, digital infrastructure and real estate, and industrials. Year-to-date, the model has gained 13.21%.

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.

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: The iShares International Model (ISHRINTL) sold the iShares MSCI Brazil ETF (EWZ) and bought the iShares MSCI Taiwan ETF (EWT). The iShares Sector Rotation Model (ISHRSECT) sold the iShares North American Natural Resources ETF (IGE). The iShares Tactical Model (ISHRTACTICAL) sold the iShares US Oil Equipment & Services ETF (IEZ) and bought the iShares US Telecom ETF (IYZ).