You tweet it, we chart it.
“Talking Numbers” recently received a tweet from a viewer asking:
@LanceRancid tweeted us:
Over the last six months the EWW, the ETF that tracks the MSCI Mexico IMI 25/50, has gained 10.6 percent. However, that’s only after the ETF fell 7.5 percent in January.
But is the EWW a buy?
Steve Cortes, founder of Veracruz TJM, agrees with our viewer. “It has been absolutely en fuego,” Cortes said. “Long term, I really do believe in the Mexican story. I think compared with other EMs [emerging markets], it’s my favorite. It’s got much better demographics than all of the BRICs do.”
But for the time being, Cortes has some worries because of the country’s currency. “What I am most concerned about is that the Mexican stock market tends to largely trade with the Mexican peso,” he said. “The peso has been extremely weak this week. This week it’s been hit very hard. It went back above 13 to 1 [Mexican peso versus the U.S. dollar]. So that worries me. I think it’s overheated. I think there needs to be near term profit taking in Mexico.”
For Richard Ross, global technical strategist at Auerbach Grayson, the EWW’s terrific run over the past few months makes it tougher to buy the ETF.
“The emerging markets have been on fire basically all year,” said Ross, a “Talking Numbers” contributor. “And that’s part of the problem here with Mexico: We are a little bit late to the party.”
Those looking to get into the EWW should for it to get cheaper, according to Ross. “If you’re a new buyer I wouldn’t chase,” he said. “I would wait for my favorite holiday: Cinco de Buy Low.”
A year-to-date chart of the EWW shows the ETF is up over 20 percent from its March lows as well as crossed its 50-day and 200-day moving averages. It has “already run its course,” Ross said.
Nonetheless, a five-year chart of the EWW shows some optimism if Ross’ technical analysis is correct.
“You have to like what you see here,” Ross said. “The uptrend from 2009 still intact and now we’ve broken out to the upside above that downtrend from 2013 – a nice little triangle breakout. That suggests that there is a little bit further to run.”
Only not just yet, Ross cautions. “In the short term, just like everything else, let’s wait for a pull back before we jump into Mexico.”
To see the full discussion on the EWW, with Cortes on the fundamentals and Ross on the technicals, watch the above video.
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