Equity Markets Shrug Off Dow Losing Streak

The Dow Jones Industrial Average ended an eight-day losing streak with a nice gain on Tuesday. Although this was its longest losing streak in six years, the overall decline was only 1.9%—hardly enough to make a dent. The sector, factor, and global ETFs treated it as a non-event and remained steady. The only change of any significance is Eurozone’s rise to the top, replacing China.

Sectors: Technology, Utilities, and Health Care remain the top three sector categories. Health Care displayed great stability in the face of uncertainty created by the congressional activities on the health care bill. Consumer Discretionary moved ahead of Consumer Staples but not by much. Financials continued to lose momentum and now has little left to lose. Unless it gets a nice bounce in the upcoming week, Financials is poised to become the fourth sector in the red. Vanguard Telecommunications (VOX) was the worst performer among our Sector Benchmark ETFs this past week. Yesterday, the House joined the Senate in voting to overturn an Obama-era internet privacy rule, an action believed to be favorable for telecommunications broadband providers. However, any positive response was muted, and Telecom slipped a spot lower in the rankings. Energy is on the bottom, where it has been eight of the past nine weeks.

Factors: You have to look closely to see any change among the Factor Benchmark ETFs. However, there near the bottom, you can see that Small Size and Value swapped places. Beyond that, all differences were confined to small reductions in momentum scores. Speaking of Momentum, it is the top-ranked factor for the third week in a row. While Momentum and Low Volatility may sound like they have little in common, Low Volatility is in the second-place spot again today. Value’s drop to 10th place coincided with the loss of its last sliver of momentum. It’s not that Value has entered a downtrend, although one might develop in the next few weeks. Instead, Value is just treading water and going nowhere. It is currently trading near the same levels it was in early December and all of January. High Beta is on the bottom for a second week and is the only factor in the red.

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