Compared to scores of other emerging markets ETFs, the 3.5% 2013 gain posted by the iShares MSCI South Korea Capped ETF (NYSEArca: EWY) is downright impressive.

Hampered by the weak yen, a scenario that has not improved, talk of Federal Reserve tapering, a scenario that has been confirmed, EWY struggled through the first half of last year. However, the fund surged almost 24% in the latter half of 2013 as investors shied away from ETFs tracking developing economies with widening account deficits to move into lower beta, account surplus nations. [South Korea ETF Poised for More Upside]

South Korea fit the bill on the account surplus side. Not only that, its stocks were seen as inexpensive. Those traits helped EWY gain 5.1% in the last three months of 2013 compared to a 1.4% gain for the iShares MSCI Emerging Markets ETF (NYSEArca: EEM). EWY could be poised to start 2014 on a strong note as well.

Deron Wagner of Morpheus Trading Group notes EWY has closed above its 50-day moving average in the past two sessions, clearing what he called a “dirty” downtrend line in the process.

“As always, it is important to look for confirmation on multiple time frames when analyzing a potential trade. With EWY, the long-term monthly chart shows that a breakout above the October 2013 high would also coincide with a break of the monthly downtrend line,” said Wagner. “If EWY can clear the $65 level, we could see a rally to the highs of 2008 (around $75).”

EWY is up 3.3% in the past week and added 1.2% on strong volume Tuesday to close at $64.67, less than 1% below its 52-week high.

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