Equities kicked off the session with a mini-rally at the opening bell only to succumb to profit-taking pressures throughout the day as “fiscal cliff” woes remain the dominant theme on Wall Street. Encouraging comments from Treasury Secretary Geithner over the weekend regarding the tax rate hikes for wealthy Americans caused the market to shed its optimism, although it wasn’t enough to bolster major domestic indexes into green territory on Monday [see 5 Important ETF Lessons In Pictures].
With no major economic data releases taking place on the homefront today, investors will turn their attention to the north where the Bank of Canada is slated to announce its interest rate decision. As such, our radar will focus on the iShares MSCI Canad Index Fund (EWC, B), which could experience volatile trading depending on how markets digest the latest outlook issued by Canada’s central bank. Analysts are expecting the benchmark rate to remain at 1.0%, although the additional economic commentary may offer more valuable insights [try our Free ETF Country Exposure Tool].
Chart Analysis
EWC appears to have completed a healthy correction since hitting $29.63 a share on September 14, 2012. Since declining down to $27 a share in mid-November, EWC has managed to bounce higher as evidenced by the fact that this ETF is once again trading above its 200-day moving average (yellow line). EWC’s sideways price action over the last week is less than bullish; however, building out support above $28 a share is encouraging as this may suggest a rising level of support, in which case further upside becomes a greater possibility [see ETF Technical Trading FAQ].
Click to Enlarge
Despite trading above its 200-day moving average, we advise conservative long-term investors to consider waiting for EWC to establish definitive support above $28-$29 a share, depending on individual risk preferences, before jumping in long [see 3 ETF Trading Tips You Are Missing].
Outlook
If the latest commentary from the Bank of Canada paints a bullish outlook, EWC could be in for a green day; in terms of upside, this ETF has major resistance around $29 a share (red line). On the other hand, worrisome commentary could invite bearish pressures on the day; in terms of downside, EWC has major support around $27 a share. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.
Follow me on Twitter @SBojinov
[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]
Disclosure: No positions at time of writing.
ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships. Read the full disclaimer here.
Are you enjoying ETF Database?
Get more articles like this one via our free daily e-mail newsletter or RSS feed.
Get access to special reports including How To Pick The Right ETF Every Time and Seven Simple & Cheap ETF Model Portfolios.
