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IHDG: A Rising Dollar is No Problem For This Foreign ETFThe US Dollar Index (DXY) has gotten off to a rip-roaring start to 2024. Up more than 2% on the year, the greenback’s ascent comes after significant declines over the final handful of months in 2023. That is usually a headwind for equities, particularly shares of companies domiciled overseas. Not surprisingly, we’ve seen many foreign index funds suffer relative to the S&P 500 thus far in January. To combat these currency concerns, hedging FX exposure reaps rewards in these environments. The WisdomTree International Hedged Quality Dividend Growth Fund ETF (IHDG) does just that. In addition to mitigating the risks of a rising dollar, the strategy aims to own high-quality dividend growth companies. While this ETF can be a replacement for a high-yield or large-cap position among long-term investors, technicians might look at its chart and see an intriguing development. My featured chart is a breakout in IHDG. A rally above the key $41 level tells me there is plenty of strength away from the US mega-cap tech stocks. IHDG features a rising 200-day moving average with its price above both the 200dma and nearer-term 50dma. What’s more, following the breakout above $41, next resistance could come into play around its late 2021 highs above $46, while ample volume by price in the $36 to $41 range should offer cushion on any pullbacks. So, don’t discount non-US equities even as the SPX and QQQ lead the global markets. If the trend of a stronger DXY continues, IHDG may keep on shining versus foreign index equity ETFs.
AMEX:IHDGLong
by mikezaccardi
Are Foreign Stocks Forging a Relative Comeback? Perhaps the most important macro driver for stock prices in the last year and a half has been the US Dollar Index. The DXY has ranged between the upper 90s and about 107 since the third quarter of 2022. When the greenback has been on the rise, equities have generally been weak. A softer dollar has led to a period of stock market strength. Of course, ebbs in the forex market are always crucial for foreign stocks. That brings me to today's idea. The Vanguard FTSE All-World ex-US ETF (VEU) has sharply underperformed the Total US Stock Market ETF (VTI) since 2007. In that time, the dollar has moved from the low 70s to well above 100. I like to compare the relative price chart of VTI to VEU for a gauge of relative strength between the US and non-US markets. Right now, it might appear that discarding VEU in favor of an all-US portfolio would make the most sense. But I am monitoring a potential false breakout on the chart of VTI/VEU. If we see a continued drop off in relative US strength, then a move toward support, illustrated on the chart could be in play over the coming months. So, don’t forget about the 37% chunk of the investable equity universe that is foreign stocks. Fundamentally, VEU trades about 13 times forward earnings estimates compared with about 19 times on the US cap-weighted index. The ex-US market also features more sector diversification and a higher dividend yield. Of course, this key technical move right now bears close watch for macro investors as 2024 gets underway.
AMEX:VTIShort
by mikezaccardi
1
Everyone Believes What They Want to BelieveRealty != Belief The secret to this market is to lower your expectation continually. Bulls do not realize they are sitting in the largest bull trap ever setup. Macro bottom still pending... it's more of the same: drop, consolidate, drop. A wise Bera once said: Resistance is infinite and unbounded. When a level is broken, there will always be more resistance higher up. Support is not though, support is capped at 0. The Fed's view: www.federalreserve.gov What does the Beveridge curve tell us about the likelihood of a soft landing? "It would be unprecedented for job vacancies (openings) to decline by a large amount without the economy falling into recession. We are, in effect, saying that something unprecedented can occur." Lagging Crash Lehman Brothers filed for bankruptcy on September 15, 2008. The broader stock market did not begin its crash until a week later. Everyone initially thought Lehman wasn't a systemic risk. You say crypto crash can not crash stocks with a LAG? The doom loop is accelerating. Few understand this.
AMEX:VEUShort
by shri30389
3
Falling Dollar Creates Opportunity For Outperformance AMEX:SPY TVC:DXY AMEX:EFA The opportunity presented by a falling dollar: These are simple Yearly Candles. The chart depicts how the falling dollar can provide outperformance in foreign equities vs domestic equities. The top chart is simply a chart of the dollar index. The middle chart is EFA vs SPY. The bottom chart is that of the EFA. Take notice as the dollar weakens - represented in the first chart by red candles - that EFA outperforms SPY as denoted in the second chart by white candles. Since 2002 There have been 9 years in which EFA outperformed the SPY. 7 of the years have been associated with a falling dollar. One of the off years was 2005. The dollar was up, but the overall long term trend was still down. The other off year, was this past year. Even though the dollar was strong it peaked in Q4 and fell precipitately into the new year kickstarting new strength in EFA. The 9 years of outperformance generated positive returns in 7 of those years. The 2 years of negative performance were in 2002 and in 2022. Two of the worst years on record risk assets globally. Those seven years generated returns of: 2003: 38.15% 2004: 17.16% 2005: 11.26% 2006: 23.20% 2007: 7.21% 2012: 14.80% 2017: 21.79% Average Return: 19.08% What is noticeable is how strong the returns can be when the dollar enters a secular decline. 2003 through 2007 was particularly outstanding. During that time the dollar fell by roughly 34%. While there hasn't been a secular decline in the dollar since then, I think it pays to keep an open mind to the possibilities. Funds for the falling dollar: $EFA $VEU $VEA $VXUS
TVC:DXYLong
by Breakout_Charts
3
SPX 19'/20'Taking a look at risk trends, not much has changed in terms of standings. However, lack of conviction in the equity markets is very high right now. Many of the bears from the last retest of the 2800$ floor from the last 2 months are gone, wiped out with every consecutively green daily candle. However, the most insecure traders right now are the bulls, constantly being forced to recalculate and review the actual value in these underlying assets. There is statistically much less potential for continuation however an enormous amplitude in loss if things begin to deteriorate from here. This is a decade long run, with more than half of this simply being conviction in itself. However, we're coming to the end it seems, as the amount of volatility has increased with more downside potential ever so increasing. The DOW, NASDAQ & SPX are all patterns that are prominent. After 6 weeks of upside price action, the 5 day ranges are becoming more and more interesting to qualify as the "most hated bull-market". Looking at VEU rest of world equities, you have the positive performance and congestion however the ability to achieve new all time high isn't here. When you compare this to the DEU30, EEM, it's obvious that the help isn't coming out of the U.S. market. EUR/JPY or AUD/JPY further shows both the insecurity and lack of confidence in the market right now.
TVC:SPX
by UnknownUnicorn3442968
When Trump Made America Great Again - SPXSP:SPX TVC:SHCOMP AMEX:VEU TVC:SX5E AMEX:VEU 1, Vertical lines: Thin Orange is Trump wins election. Thick Orange is start of Trump presidency 2. Chart Lines: White is USA stock market, S&P500 Blue is the European “Dow Jones”, Euro Stoxx 50 Orange is the market cap weighted index of the entire planet’s stock markets (the 44 countries with capital markets), except the S&P 500. “All World minus USA” ETF. Red is China stock market. Summary: Between January 29th and May 24th, 2018, The U.S. went from lagging the World’s stock market to clearly leading the Earth’s stock. I propose this is a direct result of the announcement and implementation of Tariffs. 1st with $50B of tariffs on China on March 22nd, 2018. - I had initially thought this was due to Brexit (Britain exiting the European Union), However, the Brexit vote happened in June 2017, and actually seems to have boosted their markets. - For symmetry, and to compare apples 2 apples, this chart is in log percentage format.
AMEX:SPYLong
by jgeno