There are numerous ETFs that track everything from countries, commodities, currencies, and stock market indices to individual market sectors. ETFs provide a wonderfully easy way to discover what is happening in the world markets. I apply a version of my System Quality Number® (SQN®) score to measure the relative performance of numerous markets in a world model.
The Market SQN score uses the daily percent change for input over a 100-day period. Typically, a Market SQN score over 1.47 is strongly bullish, and a score below -0.7 is very weak. The following color codes help communicate the strengths and weaknesses of the ETFs in this report:
- Dark Green: ETFs with very strong Market SQN scores (> 1.47).
- Light Green: ETFs with strong Market SQN scores (0.70 to 1.47).
- Yellow: ETFs with slightly positive Market SQN scores (0 to 0.70). These are Neutral/Sideways
- Brown: ETFs with slightly negative Market SQN scores (0 to -0.7).
- Red: Very weak ETFs that earn negative Market SQN scores (< -0.7).
This is basically the same rating scale that we use for the Market SQN Score in the Market Update. The world market model spreadsheet report below contains a cross-section of currently available ETFs; excluding inverse funds and leveraged funds. In short, it covers equity markets around the globe, major asset classes, equity market segments, industrial sectors, and major currencies.
World Market Summary — Equities & Currencies
Each month we look at the equities markets across the globe by segment, region, and sector.
All four time modes where we monitor market type direction (see update article above) are bullish – which we seldom see. In the hot areas, we see strength in online retail and Robots and AI, and Bitcoin. Marijuana is neutral and Hemp is bullish.
Look at the table below. It’s now mostly totally green. In Asia, only Malaysia is yellow. In the Americas, everything is bullish. In Europe, only Poland and Russia are neutral. And in Africa, only Egypt is yellow.
In the US market sectors, the strong bears are aerospace and defense and volatility. But everything else is either neutral or bullish. The neutral sectors include energy, homebuilders, oil and gas equipment and exploration, REITS, utilities, food and beverage, networking, telecom, and marijuana. The strong bull sectors include: 1) semiconductors, broker dealers, gaming, media, and robots and AI. The performance of broker-dealers might be a good measure of the long-term health of the market.
Commodities, Real Estate, Debt, and the Top and Bottom Lists
There are three bear sectors in commodities – gold, silver, and natural gas. Oil is neutral and everything else is bullish. Despite the strong score, it appears KOL stopped trading in December.
Real estate ETFs are generally bullish except China which is neutral. Last month real estate was bearish but let’s look at one example of US real estate. My thought would be that Hawaiian real estate must be totally down because the Islands are essentially isolated. But people feel safe there and mainland people are buying Hawaiian real estate like crazy.
In bonds, inflation-protected bonds and junk bonds are bullish while short term bonds are neutral and long-term bonds are very bearish. Why would you want to be in debt instruments paying less than 2-3% when the value of the US Dollar has gone down 10%?
The hot areas on the top 15 list are again clean energy. What’s interesting to me is that GBTC is up almost 300% since we did the GBTC offer to our Super Traders – but GBTC only ranks 60th in our list of ETFs that we track. Also, notice that gold and silver are both bearish. That seems to indicate that institutional investors are clearly starting to prefer BTC to gold as a hedge against the collapse of the US Dollar.
What’s interesting is that we must be in an agricultural boom. Soybeans are the top-ranked ETF and corn is number 4. But everything else in the top 8 has to do with clean energy. Lithium batteries are also in the top 10.
On the bottom 15 list, the top 14 are strong bear and are mostly fixed income instruments. The two worst ETFs both have to do with the US Dollar going down. The Indian Rupee is also crashing.
Let’s look at the summary table which measures the percentage of ETFs in each of the strength categories. You can see the distribution of the database by Market SQN score in bullish, neutral, and bearish categories below –
I have highlighted the most extreme values for each column since we started this report in 2015.
The overall picture jumped dramatically in one month from overwhelmingly bullish with 81.7% of the database in the very bullish or bullish categories. This month the database has 51% bullish, 34.1% neutral, and 14.9% bearish.
Our GBTC offer went so well that a lot of people have cashed out of their positions to pay for their next installment of the Super Trader program. BTC has gone from about $10,000 when we opened the program to almost $35,000.
Until the beginning of February, this is Van Tharp.
Be careful to base your actions upon what IS happening, not what you think might happen. The markets always offer opportunities, but to capture those opportunities, you MUST know what you are doing. If you want to trade these markets, you need to approach them as a trader, not a long-term investor. We’d like to help you learn how to trade professionally because trying to navigate the markets without an education is hazardous to your wealth. All the beliefs given in this update are my own. Though I find them useful, you may not. You can only trade your own beliefs about the markets.