International ETFs Are Extremely Overbought 1 comment
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All of the non-country specific international ETFs that we track are currently in overbought territory. We highlight these ETFs in the table below, and as shown, they have all made big gains over the past 5 days and are trading well above their 50-day moving averages.
The ETFs become overbought when they trade more than one standard deviation above their 50-day moving averages, and the % overbought column below highlights how much they are overbought by. As shown, the emerging market ETF that covers Brazil, Russia, India and China (EEB) is overbought by 13%. Other emerging market ETFs (GMF, EEM, GMM, VWO, GML) are also very overbought but not by as much.
While international equities are an important part of any asset allocation strategy, it may be a good idea to rebalance the portfolio by taking some profits if their weightings have grown significantly.
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This article has 1 comment:
Could you care to comment about the selection of 50 day moving average and 1 standard deviation? Is this same as Bollinger Band? I thought Bollinger Band standard was 20 day moving average and 2 standard deviation. Is there any reason why the bollinger band setting is different for ETF? Thanks!