PIIGS
The I-Fund report
It's been a while since I've gone in depth into the I-fund and its countries. This is because I tend not to focus on the things I'm not invested in. Nevertheless there are some things I feel I should point out.
I chart the top 8 weighted I-fund countries and two of the PIIGS are numbers 7 & 8 on the I-fund charts; Italy & Spain. For Italy's ETF we have a Bearish 50/200 EMA death cross. While many markets peaked in January Italy peaked on October 19th.
As for Spain's ETF, it peaked on 25 December and gave us a textbook Head and Shoulders formation. You can see Jan 19th was the break below the neckline and this was the same day SPX peaked at 1150. We also got a small bounce off the price objective before the large gap down.
One thing I should point out is that I'll call a head & Shoulders if both shoulders meet a 50% retracement of the Head. The Right shoulder while small met the exact 50% minimum of this criteria. Also, if the left shoulder's peak is higher than the right shoulder's peak, then prices usually decline further then the price objective once it breaks below the neckline.
As for volume, in a H&S we should expect a decline as we enter the right shoulder. Notice the On Balance Volume (OBV) is strongest at the left shoulder and then declines as it passes through the right shoulder.
Lastly we have that oh so famous 50/200 EMA Death Cross.
With EFA we failed to get 3 closes above the critical 38.2% Fibonacci level, and the 200 EMA. In addition, my slow stochastic has failed to cross over 50, this tells me momentum is not confirming this latest short-term rally. Could it change next week? Sure it could, but that's not a bet I'd take within the restrictions of the TSP world.
Here are the stats on the top 4 weighted countries. The EFA chart is the weakest while London is the strongest. Japan, France and Germany are stronger than EFA, but not by much.
Japan: Price > 200 EMA, but < 20/50 EMA. Friday prices plunged 2.05% closing below 38.2% Fib.
London: Price > 20/50/200 EMA. Resting just below 61.8% Fib, Sto crosses over 50.
France: Price > 20/200 EMA, < 50 EMA. Just above 38.2%
Germany: Price > 20/50/200 EMA, Just above 38.2%
As for the I-fund currencies, I only track the Dollar, EURO, YEN and British Pound. Interestingly, along with Spain's ETF, the EURO also peaked on 25 December. We do have the 50/200 EMA death cross and I did redraw the Fibonacci levels lower, adding in Thursday's new low.
Lastly for USD/JPY, I don't normally point out a candlestick shooting star bearish reversal pattern because I don't trade on them. But I do find this one to be of interest because it was trading at the top of the channel and was rejected by the 200 EMA all at the same time. I'll be curious to see how that one plays out.
It's going to take years for the PIIGS/EURO to sort themselves out. If you're a long term investor, these might be the years you want to Birchtree your way down and wait to cash out on the next Bull market up. As for my view, the I-Fund is a slowly dying fund filled with old "resource depleted" Europe and "old work force" Japan. We desperately need an emerging market's fund to help fill the gap.
Thanks & take care... Jason
It's going to take years for the PIIGS/EURO to sort themselves out. If you're a long term investor, these might be the years you want to Birchtree your way down and wait to cash out on the next Bull market up. As for my view, the I-Fund is a slowly dying fund filled with old "resource depleted" Europe and "old work force" Japan. We desperately need an emerging market's fund to help fill the gap.
Thanks & take care... Jason
