Buying the Japan ETF Versus Singapore - Mid-Day Minute for Mon March 5th 2007

Mar 05

Buying the Japan ETF Versus Singapore

by Mike Paulenoff, Mon March 5th, 2007

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This chart shows the dfferential between the iShares MSCI Japan Index (AMEX: EWJ) and iShares MSCI Singapore Index (AMEX: EWS) -- Japan minus Singapore. From May into Feb., the Singapore market rocketed (EWS) in relation to the Japanese market (EWJ), which reduced the premium of the EWJ to roughly $2/share from $6. During the past couple of weeks, however, the EWJ has performed better than the EWS, which has lifted the EWJ premium to $3.22 from $2.06. My technical work (and my per- ceptions of the relative fundamentals) argue that the EWJ will continue to outperform the EWS (in either direction), and will expand the premium to $4.25-$4.50 in the upcoming days-- on the way to $6.00 thereafter. It is with this in mind, that I enter an equal dollar spread position, long the EWJ vs. short the EWS... MJP 3/05/07 1:30 PM ET EWJ: 14.28; EWS 11.03 = $3.25

Chart

Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!

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