The Precious Metals sector has fallen on quite a bit of volatility recently after starting off the year on a positive note, and as a result have seen a change in the PowerShares Sector 7 Model.
There is a change to the PowerShares Sector 7 ETF Model as PSAU (Precious Metals) is being replaced by PSI (Semiconductors).
In January of this year the Precious Metals Sector was among the best performance sectors in the market, and had seen quite a bit of improvement on a relative strength basis, enough so to cause this sector to become a Favored Sector. As well, the PowerShares Global Gold and Precious Metals ETF PSAU moved up the rankings of the relative strength matrix of PowerShares Sectors to overtake the top spot. The improvement within this sector causes PSAU to move into the PowerShares Sector 7 Model POWER7 in January 2015. However, over the past couple of months PSAU has not been able to show any follow through on the upside, but has actually deteriorated on both a trend and relative strength basis. Therefore, this week PSAU is being removed from the PowerShares Sector 7 Model, and the PowerShares Dynamic Semiconductor ETF PSI is being added in its place.
Despite falling 18% over the past couple months while PSAU was a member of the PowerShares Sector 7 Model, the model continues to show strong returns on a year-to-date basis with a positive return of 5.57% versus a return of -0.27% for the S&P 500 SPX. In addition to PSAU falling down the ranking of the relative strength matrix for PowerShares Sectors, the trend chart of PSAU has also entered into a negative trend earlier this month with the move to $17. Lastly, the overall technical fund score of PSAU has dropped below 2. On the other hand, PSI presents a strong technical picture, which can be seen in the fund score of 5.94, and currently ranks within the top 5 of the PowerShares Sector ETF Matrix. The trend chart of PSI continues to trade above the bullish support line, and thus in an overall positive trend. Just this month PSI has moved to a new high at $28, and the price objective of $39.75 suggests there is more potential upside from here. So, this week PSI is replacing PSAU in the PowerShares Sector 7 ETF Model. For a complete list of the holdings of the model please see the PowerShares Modelssection of this report.
