Bullish fever ran wild across equity markets on Wednesday after the Fed and the central banks of the Euro zone, Canada, Japan, United Kingdom, and Switzerland agreed to collectively lower the cost of offering dollar financing through swap arrangements. The S&P 500 led the way higher, soaring 4.33% for the day, while the Nasdaq lagged behind, still managing to clinch a 4.17% on the day. Gold and oil charged higher alongside soaring equity markets. Futures prices for the precious metal settled near $1,750 an ounce for the day while crude oil managed to hold its head above the $100 level as the trading session drew to a close.
Switzerland’s third-quarter GDP is slated to come out before Wall Street’s opening bell, which makes the iShares MSCI Switzerland Index Fund (EWL) our ETF to watch for today. Investors will look to see if the financially sound European nation is still on track, with analysts expecting growth to come in at 1.8% year-over-year, a modest decrease from the previous reading of 2.3% [see EWL Scorecard & Rankings].
Even Switzerland, which is largely considered as one of the most financially stable nations in the world, couldn’t escape the Euro zone debt drama [see our Euro Free Europe Portfolio]. Notice how EWL has endured a serious correction since topping out at $28.57 a share on 6/1/2011. Since breaking below its 200-day moving average (yellow line) in early August, EWL sank lower and lower as the European debt woes intensified, hitting a recent low at $20.67 a share on 9/23/2011. Investors should note that EWL has considerable support around the $21 mark, seeing as how this ETF has managed to hold its ground above this level on 9/23/2011, 10/4/2011, and once again on 11/25/2011 [see EWL Charts].
Despite carving out a very clear triple bottom, establishing a long position in EWL at current levels is still quite speculative from a technical perspective since the fund is still trading below its 200-day moving average.
If Swiss GDP surpasses analyst expectations, investor worries surrounding the Euro zone may ease up even more, potentially paving the way higher for EWL [see Top 5 Countries Most Widely Represented By ETFs]. In terms of upside, this ETF could very well summit the $23 mark by the end of the week, while over the coming weeks we would advise short-term traders to lock-in profits at $25 a share, given that this is a significant resistance level. On the other hand, if uncertainty resurfaces after a gloomy economic outlook, EWL may very well re-test support at the $21 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.
Disclosure: No positions at time of writing.