Equity markets started off yesterday on a weak note as Standard & Poor’s warning of a possible downgrade for all Euro zone member nations weighed down on investors’ confidence. Performance at home was mixed, with the Dow Jones Industrial Average gaining 0.43% on the day, while the Nasdaq shed 0.23%. In the currency markets, the U.S. dollar inched lower while the euro displayed resilience after it was reported that the European Union was possibly considering doubling its bailout system. Gold futures staged a small recovery following yesterday’s sell-off, settling near $1,730 an ounce as the trading session drew to a close.
The Reserve Bank of New Zealand is slated to announce its decision regarding interest rates later today, which makes the iShares MSCI New Zealand Investable Market Index Fund (ENZL) our ETF to watch for the day. Analysts are expecting for the rate to remain unchanged at 2.5%, although volatile trading may follow depending on how investors digest the latest economic outlook commentary issued by the bank after the interest rate decision itself [see ENZL Holdings].Chart Analysis
After topping out at $34.45 a share on 8/1/2011, ENZL entered into a serious correction, starting with a violent sell-off that brought it down below the $30 level in a matter of days in early August [see WisdomTree Rolls Out Australian Bond ETF]. ENZL went onto stage a convincing comeback in August, managing to re-conquer its 200-day moving average (yellow line), only to encounter significant resistance near the $32 mark. September proved to be quite unkind for this ETF, as it slipped back below its 200-day moving average, carving out a new low just above $28 a share [see ENZL Scorecard & Rankings].enzl
Ongoing Euro zone debt woes have proven to be a formidable roadblock for ENZL, seeing as how this ETF has been making lower-highs and lower-lows since topping out at $34.45 a share and hitting a recent low point at $26.97 a share on 11/25/2011. This ETF is back underneath its 200-day moving average, and establishing a long position at current levels, although lucrative, is quite speculative for conservative investors.Outlook
If the Reserve Bank of New Zealand issues a surprisingly bullish economic commentary, equities in the prosperous island nation may rally [see Asia Pacific Equities ETFdb Category Report]. In terms of upside, ENZL may very well climb back up to $30 as share, in which case we would advise short-term traders to lock-in profits seeing as how the $31 mark is a key resistance level. ENZL is currently stuck in “mid-air”, seeing as how this ETF doesn’t have support until $27 a share, while the next level of resistance doesn’t come in until above the $30 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.
Disclosure: No positions at time of writing.