Wednesday’s ETF Chart To Watch: MSCI Switzerland Index Fund (EWL)

by on December 28, 2011 | ETFs Mentioned:

Wall Street got off to a fairly quiet start for the week as investors were reluctant to jump aboard the much anticipated Santa Claus rally. U.S. consumer confidence data surpassed expectations as the figure came in at 64.5, versus the previous month’s reading of 55.2. Despite improving prospects for the U.S. economic recovery, domestic equity indexes drifted sideways at the start of the final trading week for the year. Gold futures inched lower towards $1,595 an ounce, while crude oil prices soared to $101 a barrel, bolstered by geopolitical tensions in Iran.

The iShares MSCI Switzerland Index Fund (EWL) is on our radar screen for today as Swiss leading economic indicators data is expected to be released. Analysts are expecting for the latest KOF leading indicator to come in at 0.23, versus the previous month’s reading of 0.35. EWL may see an increase in trading volumes as investors digest the latest news out of the safe haven European nation [see EWL Holdings].

Chart Analysis

Despite boasting a world renowned financial system, Swiss equities have taken a plunge in 2011 as Euro zone debt woes have proven far too great to evade even for the most fiscally conservative of nations. When considering the chart below, EWL appears to have bottomed out at $20.67 a share on 9/23/2011, since topping out at $28.57 a share on 6/1/2011. In fact, EWL has formed a potential triple-bottom; notice how this ETF has held support near the $21 level on 9/23/2011, 10/4/2011, and most recently on 11/25/2011 [see EWL Technicals].

Click to Enlarge

This ETF is certainly in the lower-half of its trading range, which makes a long position at current prices quite attractive; however, investors should keep in mind that despite the potentially bullish triple-bottom, EWL is still below its 200-day moving average (yellow line) and Swiss equities continue to maintain relatively high correlation to broad European markets, which remain plagued with uncertainty [see Euro Free Europe ETFdb Portfolio].


If Swiss economic indicators come in below expectations, broad-based selling pressures may developed. In terms of downside, EWL could sink back down to $22 a share, although investors should note that major support lies at the $21 level. On the other hand, if investors are happy with the latest Swiss data, EWL may very well continue its trek higher. In terms of upside, EWL could climb up to the $23 level, while the $24 mark is an area of significant resistance for those with a longer-term trading perspective [see ETF Insider: Slick Picks For Year End Bulls]. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.

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Disclosure: No positions at time of writing.