The Daily Crux reports that EWJ is on an uptrend from December 2009 highs and over its April 2010 highs as of this week. Technical indicators are strong and so investors should watch the trend lines and follow up with a strategy is they decide to invest in this country. A stop loss in place can help keep any losses to a minimum, while playing any upside potential.
One risk to Japan’s economy still hangs around, though: the strong yen, which has been a thorn in the country’s side all year. CurrencyShares Japanese Yen (NYSEArca: FXY) is up nearly 14% this year, and it’s having the negative effect of making Japan’s exports more expensive. If it keeps getting stronger, EWJ could suffer.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Tisha Guerrero contributed to this article.