I’m bullish on this ETF and here’s the entry
Dave Floyd is a professional FX and stock trader based in Bend, OR and the
President of Aspen Trading Group. Dave’s approach to FX combines technical
and fundamental analysis that results in trades that fall into the swing
trading time frame of several hours to several days. For a free trial to
Dave Floyd’s Daily Forex Alerts
Today’s piece will attempt to intertwine the analysis that I do day-to-day
in the FX markets, and translate it into a longer-term stock trade.
For those involved in the FX markets, or those the follow Australia to any
degree, you will know how sensitive that economy is to commodity prices as well
as exports to Asia. Given the recent resurgence in equity markets and
economic indicators in Asia, this should have positive implications for the
Australian equity market. The improved economic activity however, has yet
to be reflected in the Australian dollar, but that is a topic for another day.
Key Points:
– 36% of Australia’s exports go to China, South Korea and Japan, all of
which are firing or beginning to fire on all cylinders
– Commodity prices continue to soar. 33.6% of Australia’s net
exports consist of base metals and agricultural product, all of which are in a
bull market
– The Australian Dollar (AUD) is positively correlated to the price of
copper, zinc, gold & aluminum. If and when the AUD reacts positively to
the above mentioned trends, it will reduce Australia’s current account deficit
– Japan is still a larger export market for Australia despite the
growth in demand from China. If Japan is in fact coming out of the
decade(s) long slump, this will be a huge boost to Australia.
– Rates are likely to be pushed higher in 2006
As we all know, fundamentals sound nice on paper, but rarely, if ever, do
they provide a useful timing vehicle. However, technically, we like the
Australian i-Shares
(
EWA |
Quote |
Chart |
News |
PowerRating) as a practical way to play an extended move
higher.
Based on our read of the daily and weekly charts, a move towards $21.50 is
not out of the question.
As always, feel free to send me your comments and questions.
Dave Floyd is a professional FX and stock trader based in
Bend, OR and the President of Aspen Trading Group. Dave’s approach to FX
combines technical and fundamental analysis that results in trades that fall
into the swing trading time frame of several hours to several days.