Conclusion, Investment Implications, Strategy

The iShares MSCI Mexico ETF (EWW) is in the midst of an October 2022 major uptrend and has outperformed the S&P 500 (SPY) by 27% since mid September of last year.  Currently expanding investor assets indicate favorable conditions for these current trends of outright strength and relative outperformance to continue.

Current Sector & Industry Group Ideas

Table 1 below is also accessible via the Sector & Industry Group Ideas rectangle at the top of the Research Center.

Table 1

Click the table to  make it larger

This table also regularly appears in our weekly Keys To This Week: Sector & Industry Groups report published on Monday mornings.

Analysis and Rationale

The iShares MSCI Mexico ETF (EWW) will invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index. The underlying index is a free float-adjusted market capitalization-weighted index that is designed to measure the performance of the large-, mid- and small- capitalization segments of the equity market in Mexico. The fund is non-diversified.

The upper panel of Chart 1 below plots EWW daily since January along with its 200- and 50-day moving averages, widely-watched major and minor trend proxies.  The lower panel plots the corresponding daily relative performance of EWW versus the SPDR S&P 500 ETF Trust (SPY) along with its 63-day moving average, the latter which is used to identify the Strategic (quarterly) trend of relative performance versus the broad market.

Chart 1

The upper panel shows that EWW is in the midst of minor and major uptrends and that minor support currently exists at 58.76.  The lower panel shows that EWW has been outperforming SPY on a Strategic basis since the beginning of the year and also that this trend was successfully tested in February, March, and April.  

The upper panel of Chart 2 below also plots XHE daily since January, this time with a corresponding chart of the daily total net assets invested in EWW and their 21-day moving average, which we use to identify a monthly (our Tactical time period) trend of expansion or contraction.  

Chart 2

The lower panel shows that these assets are currently in an Apr 11th trend of monthly expansion and that EWW has risen by 3% since then.

The current combination of a positive trend, relative outperformance, and expanding assets establishes favorable conditions for the current rise in EWW to continue.