EWU trade ideas
EWU (UK) ETFThis whole world has gone Turkey stupid (see TUR), OK is close to all time high because GDP went up 0.1%.
that's right, 0.1%
Wow.
I do not recommend shorting anything until one of the Fed members tank the market next week, lol. Watch the event schedule next week. look at Mexico (EWW) as well. The whole world has gone pumptastic. Too much money floating around I guess.
$EWU United Kingdom buy (3/5)Conviction: 3/5
Main risk is that we will retest previous support at a lower level
Evidence
breaking out of LT support (2007)
RSI-D recently turned down from overbought levels
Risk
Could retest previous resistance at lower levels in the coming weeks/months
RSI-M and RSI-W are not showing particular signs of overbought or oversold
Rotation in international marketsIntroducing the Buffett Indicator
One aspect of the recent rotation from growth stocks to value stocks is that investors have been rotating into undervalued markets that have suffered ten-year downtrends. The "Buffett Indicator" provides a way of comparing country-wise stock market valuations. The indicator divides total market cap (TMC) by GDP plus Total Assets of Central Bank (TACB) to calculate the Implied Future Return (IFR):
TMC / (GDP + TACB) = IFR
Developed Markets
Of the developed markets, Singapore ranks best for Implied Future Return:
Singapore ($EWS): 6.8%
Spain (EWP): 4.9%
UK (EWU): 4.7%
Australia (EWA): 4.0%
Most other developed markets have negative IFR. Of the emerging markets, Egypt has IFR above 25%, and Pakistan above 10%. Turkey, South Africa, and Indonesia are all above 8%.
Now look at how some of these indexes have been trading. Australia was one of the first to break out of its long down trend in November of last year:
Spain also broke out in November:
Now the UK has broken out as of yesterday, as you can see in the chart above. Singapore is lagging a bit in sympathy with China, but you can see that it's making a run at its trend line:
Emerging Markets
The developed markets have definitely outperformed the emerging markets in this rotation. That's because developed market currencies have been crushing the emerging market currencies. I think that we could start to see some emerging market strength, though. South Africa is climbing:
Here's Turkey, struggling to break that trend line:
Egypt looks to be working on a U-shaped bottom:
EWU showing a key bullish reversal barAMEX:EWU is in an established uptrend and, though it has broke below a trendline, shows plenty of strength to the upside. With this key bullish reversal bar, it looks that this drop is probably a very normal pullback before it continues to move upward...at least to the previous trendline.
U.K. Leads the Pack Placing Premium on Done DealEquities out of the United Kingdom have led the European regional indices higher on the back of strong performance from companies like BP plc., which has a TACVOL score of 3.25 suggesting that a near-term reversal is imminent.
Cyclicals, such as miners, and dollar earners led the falls while consumer staples such as Unilever, TACVOL score of 3.09, are in favor.
More broadly, the iShares MCSI United Kingdom ETF (EWU) has been a large beneficiary of low daily volume and now a hair better then two deviations below the mean; and the weekly volume is now in the process of trading above to below the mean.
EWU TACVOL score is 2.2, just above Denmark equities at 2.1. This suggests that near-term momentum is bullish but beginning to get over-extended. To put into context, the intermediate TACVOL score is 1.55, firmly bullish but not as extended. The headline-influenced index is priced near-perfection and likely to get walloped on the next negative Brexit one-liner.
United Kingdom ETF Bullish Cup Pattern I-Shares United Kingdom ETF EWU
has built a Bullish Cup Pattern, as seen on the included chart.
The next decline could form the "handle" on the pattern,
which would then form a completed "Cup and Handle" Pattern.
Daily Volume in this ETF is over a million shares, so plenty of liquidity for traders.
A near term bullish breakout in EWU would project this ETF up to the 36.00 price area.
THE_UNWIND
float listFLOT Ishares Floating Rate Bond Etf 0.16% 0.32% 50.89 50.38 0.00% 50.84 Buy Strong Buy 50.85 768.111K
DRIP Direxion Daily S&p Oil Services Bear 3x Shares 43.89% -9.72% 54.75 10.28 -0.99% 17.92 Buy Strong Buy 19.08 779.961K
CHKP Check Point Software Tech Ltd 6.54% 32.90% 104.64 74.34 0.30% 103.05 Buy Strong Buy 103.41 1.036M
EL Lauder Estee Cos Inc 9.05% -1.87% 97.48 75.30 -0.91% 85.37 Sell Buy 85.18 1.502M
EWU Ishares Msci United Kingdom Etf 4.05% 6.58% 33.13 27.60 0.03% 32.44 Sell Buy 32.37 1.577M
ERY Direxion Daily Energy Bear 3x Shares 23.63% -3.99% 21.50 8.59 0.08% 11.84 Buy Strong Buy 12.41 1.809M
SPLV Powershares S&p 500 Low Volatility Portfolio 5.01% 7.46% 44.01 39.61 0.05% 43.52 Buy Strong Buy 43.61 1.873M
KCG Kcg Hldgs Inc 44.37% 29.00% 19.78 11.74 -0.15% 18.29 Buy Strong Buy 19.75 2.66M
CYTK Cytokinetics Inc 27.83% 46.49% 14.35 7.18 4.78% 12.76 Buy Strong Buy 14.25 6.551M
P
POST-BREXIT, EWU FALLING INTO A BUY AREAOn a fairly regular basis, I look for things to add to my covered call portfolio. While on occasion I'll dabble in individual underlyings, my preference is to look to exchange traded funds that represent an asset class (e.g., XRT (retail), XLF (financials)) or market (e.g., EWZ (Brazil), EEM (emerging markets)) so that my hat's not always hanging on a single equity in the class.
Unless you've been hiding under a rock or have been stranded on a desert island, the "hot topic" of the day is Brexit, so it makes sense to look for exchange traded funds with exposure to the U.K. or Europe to see if something pops out -- EWU does.
For one thing, it's awfully cheap -- especially when compared to SPY, IWM, and FTSE futures -- such that doing a covered call won't eat up a huge amount of capital if that's the option you go with here. On the other hand, it's almost too cheap to work it with a short strangle, since there's hardly any "meat" (i.e., premium) on its bones.
Because patience generally pays off, I'm waiting for it to fall into this long-term support area between 14 and 13.25 before pondering a bullish setup and am setting an alert to remind me to again revisit the chart if it continues to collapse to that area. As an alternative, I can just start to sell puts in that buy area, hoping to get an assignment at a favorable price; otherwise, I'll just pocket the credit received in the event price doesn't break my short put (currently the August 19th 14 put is priced at about $50; that ain't exactly "huge premium").
Others on my "shopping list": XLF, XBI, and EFA ... .
FTSE 100 (EWU) poised to sell offMarkets around the world have had a nice run lately including the FTSE100 but this pattern presents a risk. Using the EWU ETF as a proxy for the FTSE100 (they differ a bit but its close) the chart demonstrates the breakout from resistance on 1/2/13, the market retesting old resistance now support on 1/8/13 and the rally higher from there. If we look at the price action from 12/12/12 until now it forms a bearish rising wedge.
According to Bulkowski a rising wedge has four required properties:
1. Two up sloping trend lines
2. Multiple touches
3. Three week minimum
4. Volume trend should be lower
This chart meets all the criteria except the last where the volume appears flat. As time has gone by I have discounted the value of volume indicators since HFT and dark pools diminish the accuracy of this indicator. For the signal to be nullified price needs to break out of the wedge and if it can price has more room to run higher.