MarketCall
I was on BNN’s MarkerCall on Friday at 6pm, where I covered the charts presented today, as well as those requested by viewers.
This week, I’ll cover 4 international indices that look to be presenting exceptional upside potential.
Europe
I’ve covered this one in a prior blog, where I suggested that Europe was getting ready to break out and move higher — here’s the link: here. The SOX broke out past its 2600 level as originally suggested on my blog. This breakout, along with some better news coming out of Europe, suggests upside for the index. In an ideal world, I’d look for a pullback to the breakout point, but there’s no guarantee that will happen.
Japan
The Nikkei has been caught in a bearish channel since the beginning of 2010. December’s breakout of this channel makes the Nikkei a very attractive technical profile right now. The classic ETF to consider is EWJ (US) but there are others worth exploring for this potential turnaround story.
China
I suggested back in November that China might be ready to rally in this blog: here.
Caught in a nasty downtrend since 2011, the Shanghai has broken the trendline, based, and is now breaking the neckline of that base to the upside. This breakout paints a bullish picture for traders.
India
The WisdomTree India Earnings fund ETF is just starting to break both its 2-year downtrend, and a symetrical triangle formation that formed over the last half of 2012. Both of these developments are bullish for this ETF.
6 Comments
Keith:
You have made it clear of your bias for the next few months of market movement. You are lowering the beta of your portfolio with slow moving dividend payers. Two questions: When the indexes do begin to correct what areas will you be invested in, or in cash, and secondly, are you at all concerned with owning low beta dividend payers with interest rate increases in our future. Thank-you.
Hi Terry–good question- happy to answer this. If you have access to Investors Digest in your library – I answered this question specifically in my article in the January 4th issue (which should hit newsstands any day now). But in a nutshell: I still have some beta in the portfolio now, but I’m replacing the higher beta every time I sell something with a new lower beta postion. My plan is to be holding cash (>30%), and some low beta stocks at around S&P 1550-ish–which I suspect will be in the coming months.
When indexes correct, so long as its not too extreme (i.e. about 20% correction or so) we can still hold some sectors which will have less downside reaction–and sometimes even some upside if things dont get too out of hand. A mega bear like 2001-2 or 2008-9 will draw everything down. A bear thats not too extreme can see rotation into “safe” secotrs like utilities, pipeline, telecom, consumer staples, etc. You have to watch the charts at the time to see where the rotation is going–comparative relative strength becomes very important.I’m not against hedge positions (short or inverse ETF’s if not leveraged) if things get extreme. But thats a call you make as things develop.
As always, I use this blog as a way to express some of my thoughts, some of which I am actively trading, and some of which are “of interest” to me. Eg–I did trade the banks, and gold per my blog. I have not yet bought any of the country index plays mentioned this week. But I may…right now I’m thinking the markets are momentarily ready for a bit more correction so I’m on hold with new trades.
So keep reading this blog, and I will continue to write down my thoughts as things develop.
Hi Keith,
Which ETF do you use to invest in the Shanghai index?
Alan
Alan–there are no direct Shanghai ETF’s, but PEK-US seems to track the Shanghai pretty closely
bmo has hedged etfs for these markets
correction: I meant china & india , not sure about others