Nothing Much To Write About … Except Some ETFs
OK, no change in the timing
composites this week, so nothing new to report from the home front.Â
The Beige Book report really bashed the bulls’ hopes last week as it signaled
that the economy is moving laterally, at best. Also with the dollar showing some
weakness, investors may be jittery as to whether foreign monies will be pulled
out of the U.S. markets.
However, with all this negative karma
in the markets, we as traders should not fret, because when the bull reigns
again, we will have ample opportunities to jump aboard to go along for the ride.
Until that time, we will remain defensive and only take trades in the direction
of the trend.
Remember the key support levels
we should monitor on the broader markets. The Nasdaq tested 1935 last week, the
S&P 500 support level is in the 1160 range, and the Dow at 10150.
One interesting note I would like to
point out is the Taiwanese stock market in the past decade has shown a close correlation to the
semiconductor sector. The reason? Because some of the major chip makers are
located in Taiwan. Taiwan is showing some signs that the bottom is near, as
it appears to be constructing a low-level base. Continue to monitor the Taiwan
market as it is a good leading indicator for semiconductors.Â
Let’s look at how the WEBS-Taiwan
Benchmark has been doing. The Relative Strength line has made a short-term high
before price and the Williams Acc-Dis looks poised to make a new trading range
high.
In Friday’s commentary, I mentioned
Advance PCS
(
ADVP |
Quote |
Chart |
News |
PowerRating) looking like it was holding up relatively well in this
market environment. Today the stock broke out to a new high on good volume out
of its multi-week base.
Looking at the Electronically Trades
Funds, the Broadband Holdrs
(
BBH |
Quote |
Chart |
News |
PowerRating) moved higher 3.6%.
The WEBS-Korea Benchmark
(
EWY |
Quote |
Chart |
News |
PowerRating)
gained 3.1% as it closed above its 20- and 50-day moving averages. On a weekly
basis, the fund has formed a head-and-shoulders bottom. This fund looks poised to
move higher if it can close above its neckline of 15.44. I also should note that
the Williams Acc-Dis has made a new high before price has, on a weekly basis.
Also tacking on some gains was the
WEBS-Austria Benchmark
(
EWO |
Quote |
Chart |
News |
PowerRating) which closed higher 3.1%.
In the red on the ETF front was the
WEBS- UK Benchmark
(
EWU |
Quote |
Chart |
News |
PowerRating) which slid 0.6%.
The WEBS-Mexico
(
EWW |
Quote |
Chart |
News |
PowerRating) closed lower
1.4% and the Telecom Brasileiras
(
TBH |
Quote |
Chart |
News |
PowerRating) fell 1.4%.
The Telebras Holdrs
looks vulnerable as the Williams Acc-Dis has made a new trading range
low. TBH is also showing a low volatility on the 6/100 ratio which
indicates an explosive move may be imminent.Â
Remember that all securities are
risky. In any trade, you should always reduce your risk by adjusting position
size and placing open protective stops where you will sell your long or
cover your short in case the market turns against you. For an introduction to
combining price stops with position sizing, see Loren Fleckenstein’s lesson, Risky
Business.