Two months ago, I told you about an investment that the pundits hated. Since then, it has climbed 17% higher. I’ve spotted another opportunity … and the pundits hate it as well.
Back in mid-December, we looked at EWZ, the ETF for Brazil, and the potential for the Brazilian stock market to continue climbing even after already having booked a 100% gain in 2016.
Since that time, EWZ is 17% higher in only 7 weeks.
Before I reveal today’s subject, let’s see what the pundits have been saying about this particular opportunity.
“Adds yet another wave of uncertainty to sales and profits at the high end”
~ CNBC 24 Jun 2016
“If they vote to leave, the markets will probably never recover”
~ Former BP CEO, John Browne 23 June 2016
“Brexit could be really bad for the final two seasons of ‘Game of Thrones’”
~ CNBC 24 Jun 2016
Yes, we’re talking about the United Kingdom.
EWU is the ETF for the UK market. It was stopped out on the second day of the Brexit crash. It started moving back up and triggered a new SSI Entry signal in September. (Yes, whipsaws happen sometimes … but we err on the side of caution)
The price moved lower after the most recent SSI Entry signal and even dipped into the Yellow zone before the US elections. Since then, it has moved higher by almost 9%.
EWU is trading at the top of a very important resistance level. My volume-at-price chart shows that EWU is close to breaking above this level.
A break above the $32 level could send it up another 10% before running into resistance at the $35 level.
So far, it has touched this upper resistance level four times and has not broken through yet. Why do I think it could break through now?
This ETF covers 85% of the UK market. The top 10 holdings account for almost half of the ETF and eight of these are either in the SSI Green zone or Yellow zone. Having 80% of the largest companies in the UK with active SSI signals is bullish. We would expect these stocks to lead the UK market higher.
Finally, the time-cycle forecast is very positive for EWU. The forecast bottom is just a few weeks away, and a move higher is projected all the way through the end of October of this year.
Bottom line, EWU is solidly in the TradeStops’ Green zone and my other indicators are telling me that the UK market looks ready for more upside.
As always, I’ll continue to listen to the pundits, but with only one ear.
Sometimes it’s good to be a little hard of hearing,