EWJ - How to identify a plausible targetThis idea is for investors as I'm analyzing the chart in weekly and trying to identify fair targets for a long position. First you need a donchian line which is basically the middle between the highest high and the lowest low during the last 52 weeks.
Using this donchian line (nb. which is part of Ichimoku system as SSB line), you then identify the last "cycle" which is a clear half-wave with well-defined bottoms/tops. Applying the Fibo retracement tool using the top-bottom-top (or bottom-top-bottom) points of the identified wave, you'll end up with a set of Fibonacci levels. The different levels above 1.0 can be used as price targets as shown here.
EWJ trade ideas
Shorting the Japan ETFPersonally, I would not advise using the leverage, 2x or even 3x Bear ETFs unless you are super confident and knows and can accept the RISKS involved. U win 2 or 3 x but also loses 2 or 3x, can you really accept it ? The question you should always ask no matter what indicators or gurus telling you, what if you are wrong ?
Answer this question and not avoid it means you know what you are doing, has calculated the risk/reward ratio and this is a small % of your capital allocated to speculate. That is fine. And if you are RIGHT, you do not increase your position size NOT because you do not want to make more money BUT to tame your greed for future bets. Stick to the same position size with appropriate stop loss and if the table turns against you, you can still sleep well. Maybe, a conservative method but it works for me, how about you ?
EWJ(apan) - Disconnect with realityLast year the Euro markets hit all time highs (ATH) during a recession, not it's Japan's turn, lol.
Recession:
www.nytimes.com
The amount of disconnect between the stock market and reality is truly amazing. It just goes to show it's all about money supply and not fundamentals. Difficult to short anything right now.
EWJ Straddle/Trade planAlthough EWJ is not the most popular fund among retail traders, the creation of a neutral position on it at around 800,000$ suggests greater interest on the part of professional market participants, and thus we can expect fairly predictable moves at support/resistance borders.
Nikkei broke out of downwards trend.I cannot get as clean of lines in TV as I did in yahoo for this index.
i.imgur.com
I said yesterday it broke out, as it was just over recent downwards trend. (as you can see in the yahoo chart's screenshot, attached is my statement below)
i.imgur.com
This morning it touched the top of the longer term downwards trend.
29200 was my target, but looking at this TV I see 30130 should be possible.
Further included in Black Rock x Trade Central's bulls of the week was "iShares MSCI Japan ETF (EWJ:NYSE)"
i.imgur.com
So it is likely Japan will go to the new 30k target if not break out to ATH .
Japan Economy could spike?We are retesting now a 25-year-old resistance level and it's a big opportunity to ride the next Japanese economy cycle.
I don't want to get into the macro-economy details, I am only focused on unbiased TA and for me, this can be a good buy opportunity if the resistance becomes a support, at least the RR looks awesome.
About the ETF, this IShares is the largest one and the one of the oldest, so I think it's a good one to use to invest in this possible growing economy....
HOLDINGS:
Toyota Motor Corp
SoftBank Group Corp
Sony Group Corp
Keyence Corp
Tokyo Electron Ltd
Mitsubishi UFJ Financial Group Inc
Nintendo Co Ltd
Recruit Holdings Co Ltd
Shin-Etsu Chemical Co Ltd
Takeda Pharmaceutical Co Ltd
V bottomETF No rising wedges noted. NV is high.
Not a recommendation
Top 10 Holdings
Toyota Motor Corp3.97%
Sony Corp2.80%
SoftBank Group Corp2.76%
Keyence Corp2.13%
Nintendo Co Ltd1.69%
Takeda Pharmaceutical Co Ltd1.67%
Mitsubishi UFJ Financial Group Inc1.44%
Daiichi Sankyo Co Ltd1.43%
Recruit Holdings Co Ltd1.37%
Daikin Industries Ltd1.33%
This Country’s Stock Market Is Ready To OutperformDiversification is one of the keys to growing and preserving wealth. Putting all of your eggs in one basket (pun intended) can be dangerous. Luckily, diversifying your investment portfolio has never been easier. There are more than 7,000 exchange-traded funds (ETFs) that provide investors with exposure to various markets and asset classes across the globe (international stocks, bonds, commodities, real estate, etc.). For investors that want to diversify their stock portfolios outside of the U.S., Japanese (ticker: EWJ) stocks represent an interesting buying opportunity.
While stock buybacks have slowed significantly among U.S. corporations in 2020 (down 25%), they’ve surged in Japan, rising 48% this year. Nonfinancial firms have around 285 trillion yen ($2.6 trillion) in currency and deposits (highest level in two decades). Japanese companies have increased their cash stockpile by ~100 trillion yen (33%) over the last decade, suggesting that corporations have plenty of room to continue returning capital to shareholders over the next few years. In addition, the valuation of Japanese stocks is attractive relative to the U.S. The price to earnings ratio on Japanese stocks is ~15x vs. ~17x multiple on U.S. equities.
Furthermore, investors are underinvested in Japanese equities. Over the last 5 years, investors have sold ~16 trillion yen worth of Japanese stock, after plowing ~25 trillion yen into Japenese stocks between 2012 and 2015. If (when) investors begin reinvesting funds to the region, Japenese stocks will receive a boost. Japanese companies have increased their profitability. Profits as a percentage of sales have doubled from 4% to 8% over the last five years.
More importantly, the Bank of Japan (BOJ) is the only developed country central bank that is actively involved in purchasing stocks. The BOJ is a top ten shareholder of more than 50% of publicly traded companies and has no plans of slowing down. In fact, early this month BOJ extended and doubled its purchases of Japanese ETFs- lifting its annual target of 6 trillion yen ($57 billion) to 12 trillion ($114 billion) as part of their aggressive monetary policy. This will continue driving demand (buying) for Japanese equities going forward.
Lastly, Prime Minister Shinzo Abe recently announced a ~$1 trillion (108 trillion yen) stimulus package. This is equal to 20% of Japan’s national GDP. Compared to the U.S. stimulus package of $2.2 trillion, which equates to only ~10% of GDP. This significant fiscal stimulus will support the Japanese economy as it deals with the coronavirus. Among other things, the government will provide more than $55 billion in cash payments to families and small and medium-sized businesses and $240 billion in interest-free loans. Japanese companies have strong balance sheets and our returning large amounts of capital to shareholders, in addition, Japanese fiscal and monetary is the most aggressive in the world. All of the necessary ingredients for Japanese stocks to move higher are in place. It’s time investors placed their (buy) order.
-Appo Agbamu, CFA
Nothing in this email is intended to serve as financial advice. Please do your own research.