Exchange traded funds that follow Japanese stocks and the movement of the yen have seen assets move in the door after the country’s devastating earthquake and tsunami.
The most popular single-country ETF this year is iShares MSCI Japan (NYSEArca: EWJ), while WisdomTree Japan Total Dividend (NYSEArca: DXJ), ProShares UltraShort Yen (NYSEArca: YCS) and WisdomTree Japan Small Cap (NYSEArca: DFJ) have also been big sellers.
After the earthquake and tsunami, “ETF investors clearly think the reconstruction of Japan is an important investable theme,” according to one market strategist. [Single-Country Stock, Currency ETFs See Growth]
The $7.2 billion iShares MSCI Japan lost 3.6% in the first half of 2011, according to investment researcher Morningstar. The ETF dropped sharply in March as Japan was hit with the natural disasters and a nuclear crisis. It is trading below the February high. [ETF Spotlight on EWJ]
The ETF slipped in premarket action Friday, trading hands at $10.39 a share, right near the midpoint of its 52-week range between $9.20 and $11.61.
After plunging amid “runaway gaps” after the earthquake, the ETF tested the 52-week low, said David Chojnacki, market technician at Street One Financial.
“After bouncing off the low, the ETF has traded more recently in a range of $9.85 to $10.60 a share,” he said in analysis prepared for ETF Trends.
“It currently has some short term strength as it moves above its 20-day and 50-day simple moving averages. Its MACD [a momentum indicator]has also recently crossed above its signal line, indicating the momentum to the upside,” Chojnacki said. “EWJ also looks to be establishing longer term strength as it is about to move through its 200-day simple moving average. The top of the range ($10.60 a share) has been formidable resistance since March. Above this level, there is additional resistance at the $10.80 and $11.10 area. Support can be found at the 20-day and 50-day averages and also at the bottom of the recent trading range.”
iShares MSCI Japan
Chart source: StockCharts.com.
Editor’s note: For more information on Street One ETF research, contact pweisbruch@streetonefinancial.com.