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Asian Stock Indexes, Here Is The Trade



December 12, 2011 – Comments (0) | RELATED TICKERS: EWH , FXI , EWJ

Throughout 2011 most traders and investors have focused on the banking and sovereign debt  crisis in the European Union. Nearly every trading day is filled with news of different bailout plans for the large countries in the Euro-zone. This week, we shall switch gears a little and focus on the three leading Asian stock indexes. After all, the Asian markets are supposed to be the growth engines of the world. Some of the Asian stock indexes have lead the markets in the world since the 2009 stock market bottom.

The iShares MSCI Hong Kong Index Fund (NYSEARCA:EWH) topped out on November 8, 2010 at $20.24 a share. Since that high pivot the EWH has steadily made a series of lower highs. The EWH made a low on October 4, 2011 at $13.30 a share. On October 28, 2011 the EWH traded as high as $17.03 a share. Last week, the EWH finished at $15.73 a share which was near the daily chart 50, and 200 moving averages. Should the EWH rally into the end of the year it has the potential to reach the $17.50 level, this area would be very strong resistance. If the EWH reversed and traded lower from its current level traders can watch for near term daily chart support around the $14.75, and $14.00 levels. Place these levels on your charts and trade them accordingly.

China's Shanghai Index has really been the most important stock index in the world over the past six years. This leading stock index has lead the U.S. markets since November 2008. Many traders and investors in the United States will play the Shanghai Index by trading the iShares FTSE China 25 Index Fund (NYSEARCA:FXI). The FXI looks very similar to the EWH, however, the FXI is clearly trading above the daily chart 50 moving average. Last week, the FXI closed at $36.30 a share. The FXI will have important daily chart resistance around the $39.50, and $42.00 levels. Should the FXI decline from its current level traders can watch for near term daily chart support around the $34.50, and $33.00 levels.

Japan has been an economy in turmoil since it peaked in 1988. Many traders and investors will trade the Japanese market by using the iShares MSCI Japan Index Fund (NYSEARCA:EWJ). The EWJ made a 52 week low on November 25, 2011 when it traded as low as $8.83 a share. Since that low pivot the EWJ has rallied closing at $9.40 on December 9, 2011. Traders can watch for near term daily chart resistance around the $9.60 level. Should the EWJ trade above that resistance point the next important resistance level will be around $9.75, and $10.50 levels. If the EWJ reverses lower from its current level traders can watch for support around the $8.50 area.    

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