Japanese Stocks Oversold Before Key News Reports

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.

iShares MSCI Japan Index Fund  (NYSE: EWJ) closed on Tuesday with a PowerRatings of 9.


Later this week, government agencies in Japan will be reporting on retail sales, the consumer price index (CPI) and the unemployment rate. Traders will be most interested in the CPI since the Bank of Japan, the country’s central bank, is specifically targeting annual inflation of 2%. This month’s report is expected to show progress towards that goal. Economists expect consumer prices to be up 0.9% compared to a year ago, which would be the fifth consecutive month with an increase in inflation. Other economic reports are expected to be consistent with a growing economy and mild inflation.

Traders are likely to react to the news from Japan and with EWJ being oversold, the reaction could be to the upside in stocks.

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All data is as of the end of day on 11/26/2013.