The strong rebound of China’s economy is likely to provide a further boost to global stock markets, with two ETFs poised to benefit the most from the ripple effect, says MoneyShow’s Tom Aspray.
Stocks were strong Thursday as the S&P 500 and Spyder Trust (SPY) closed above the September 2012 closing high. This confirms the end of the correction and was consistent with the leading action of the market internals. Further gains are likely the next week or so but I would not chase stocks or ETFS that are well above support as one should focus on the entry level.
Overnight news on China’s GDP beat analyst’s estimates as it improved nicely from the prior quarter. This provides further evidence that their economy has turned around. I have been expecting a soft landing since last spring and continue to believe that their resurgence will have a positive impact on the global economy.
China’s neighbors are likely to get the most benefit from this turnaround and these two Asia country ETFs have traded in a tight range for the past few weeks. The volume analysis suggests that they are likely to breakout of these trading ranges soon and new long positions are recommended.
Chart Analysis: The Spyder Trust (SPY) surpassed the 2012 high at $148.11 Thursday, which completed a five day trading range.
The iShares MSCI Indonesia Investable Market Index (EIDO) has assets of $387 million with 59% invested in its top ten holdings. Since October 2012, it has traded in a range from $31.18 to $29.45. It has a 1% yield.
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