Negative Interest Rates Could Be Bullish for European ETFs
PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter these trades with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.
In the past, buying stocks with a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 4.3%. Other entries and exits also show high winning percentages and large average gains.
The European Central Bank (ECB) is considering introducing negative interest rates to the market. There are reports that the Bank is considering cutting short-term rates on some deposits from zero to -0.1%. Officials are hoping the cut would spur banks and large investment firms to reduce the amount of cash they have on deposit with the bank. Increased lending to businesses and consumers should increase the pace of economic growth according to this theory. It could also increase stock prices and ETFs tracking Spanish and French stocks are potential buys with PowerRatings of 9.
iShares MSCI Spain Index Fund (NYSE: EWP) is shown above. iShares MSCI France Index Fund (NYSE: EWQ) is shown below.
Both ETFs could be considered buys on intraday pullbacks of 3% or more.
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All data is as of the end of day on 11/20/2013.