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A quick trip around the world

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In recent weeks and months, we noted some bullish technicals starting to present themselves in some foreign markets as "new dynamics" appear to be taking place in currencies and various government debts around the world. With the U.S. market averages slowing drifting back to last year's lows, but U.S. Treasuries basically trading flat this year, it has become obvious to subscribers that the weakness in the U.S. Dollar in recent months has some capital leaving U.S. shores and moving abroad.

One play a trader/investor begins to look is the iShares, traded on the American Stock Exchange. The iShares are a popular security to trade among traders looking to expose capital, both bullish and bearish, in foreign equity markets.

iShares traded on the AMEX - Sorted by Year-to-date % gain/loss

I've highlighted in "red" the S&P 500 Index (SPX.X) 1,033 as a benchmark for U.S.-based investors to measure some of the other foreign markets year-to-day gains/losses against.

So far this year, the S. Korean iShares (AMEX:EWY) $23.49 +2.44% has been the best performer. A quick look at the supply/demand chart shows this stock has given 5 buy signals since November of last year. The first sign of trouble would be a trade at $20.00.

S. Korea iShares Chart - $0.50 & $1 box

It's rather apparent that the S. Korean iShares (EWY) have been on a nice run since November of last year and have yet to give any type of "sell signal" that would be an alert to potential weakness. The year-to-date gains in the EWY are a bit perplexing though. According to the prospectus, this fund was weighted as 41.2% TECHNOLOGY. When you look at this morning's 09:00 Update and sector review, many of the U.S. technology sectors have been horrible performers this year.

Many subscribers have asked just how they can trade/invest some of the overseas markets. The above list is a starting point.

For those that are interested in some of the various "industry weightings" in the various iShares, www.indexfunds.com has some free information that you may find useful.

Jeff Bailey
Senior Market Technician
Option Investor

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