ETF Trends
ETF Trends

The U.S. Dollar has jumped above 100 against the Japanese yen for the first time since September and with USD/JPY up 0.81% on Thursday, this could be the start of a technical breakout for a broad swath of Japan ETFs that so many traders and investors have been anticipating.

Providing some confirmation is Thursday’s action in the db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP) and the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ), the giants of the yen hedged ETF universe. DXJ, this year’s top asset-gathering ETF, is up 1.5% on volume that is 21% above the 90-day trailing average. DBJP is higher by the same amount on volume that is more than triple the three-month average.  [10 ETFs That Doubled in Size]

Today’s move in DXJ could also serve as confirmation the ETF is breaking out of a triangle pattern and the ETF is within striking distance of $50, a level it has not closed above since May.  DBJP’s chart looks similar and it looks like the ETF could fill in a downward gap caused when the yen spiked in May.  DXJ and DBJP are 8.4% and 11.6% below their 52-week highs.

The iShares MSCI Japan ETF (NYSEArca: EWJ), which is not currency hedged, is up 1% today, though it appears unlikely volume in that ETF will meet the daily average. Still, EWJ is poised to close above $12 for the first time since October.

While Thursday’s action in USD/JPY and the aforementioned ETFs can be construed as encouraging, yen bears and Japan equity bulls may not want to get too excited too soon.  A longer-term chart shows the Nikkei 225 was recently rebuffed at a key resistance area and that Japan’s benchmark index has been making a series of lower highs dating back to the early 1990s. [Japan ETFs: An Epic Move Could be Afoot]

The title of best Japan ETF on Thursday goes to the WisdomTree Japan Hedged SmallCap Equity Fund (NasdaqGS: DXJS), which is higher by 2.1% on light volume. DXJS, DXJ’s small-cap cousin, debuted in late June and has almost $28.3 million in assets under management.

WisdomTree Japan Hedged Equity Fund

Tom Lydon’s clients own shares of DXJ.