Ongoing Strength Overseas (EWJ, EWP, TRF, ILF, EWY)

Includes: EWJ, EWP, EWY, ILF, TRF
by: David Fry

David Fry (author of The ETF Digest) submits: Some overseas equity ETFs are continuing their rise while US stocks fall.

The Nikkei 225 Index rose 2.50% Monday night while EWJ (Japan ETF) gained just shy of 2%. Why the difference? Currency differentials are a big factor and poor market making. Further, the AMEX just announced that they will commence trading options on EWJ. Will that make the market more or less efficient? That’s a question time will answer. Further, with EWJ at only around $12 per share, why are options needed? Aside from the obvious leverage and hedging benefits, if retail investors wanted to short EWJ, they probably couldn’t. [charts and commentary below]

Since we’re at it, why not mention EWY (Korea ETF) which continues to do well despite market slumps elsewhere in the region: