Conclusion, Investment Implications, Strategy
Am emerging major bottom in the iShares MSCI Mexico Capped ETF (EWW) targets an additional 18% rise to 54.50 that will remain valid above the 44.84 area. This is an Asbury Momentum idea.
Analysis and Rationale
The iShares MSCI Mexico Capped ETF (EWW) seeks to track the investment results of the MSCI Mexico IMI 25/50 Index. The fund will at all times invest at least 80% of its assets in the securities of its underlying index and in depositary receipts representing securities in its underlying index. The underlying index is a free float-adjusted market capitalization-weighted index with a capping methodology applied to issuer weights so that no single issuer exceeds 25% of the underlying index weight, and all issuers with a weight above 5% do not cumulatively exceed 50% of the underlying index weight. The fund is non-diversified.
Chart 1 below plots EWW daily since mid 2017. The green highlights point out the mid December breakout higher from more than a year of sideways investor indecision from the November 2018 lows. This suggests a major bottom is in place. A sustained rise above the upper boundary of the indecision area, currently at 45.15, would confirm this and target an additional 18% rise to $54.50.
Table 1 below shows that, considering the aforementioned upside target and a protective stop placed below the 44.84 area, a long entry price of 46.19 would provide a 1:6.2 risk/reward ratio (risking $1.00 to make $6.20) with an initial risk of 2.9%.
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