for unemployment, which was a bit steeper than the expected 359,000, and also above the previous reading of 367,000. Nonetheless, stocks climbed higher right from the opening bell with the Nasdaq leading the rally [see Free Report: Seven Simple & Cheap ETF Model Portfolios].
Investors will briefly take their eyes off earnings results as the latest China GDP data comes into focus on Friday. The iShares FTSE China 25 Index Fund (NYSEARCA:FXI) could see an increase in trading volumes as investors react to the latest economic growth figure; analysts are expecting for GDP growth of 1.9%, a slight down-tick from the previous reading of 2.0% [see our Asia-Centric ETFdb Portfolio ].
FXI is currently trading at attractive levels for those looking to establish a long position; notice how this ETF has been climbing higher along a rising support line since bottoming out at $28.61 a share on 10/4/2011. Furthermore, FXI has broken above its 200-day moving average (yellow line) since then, perhaps suggesting that it is in the beginning stages of an uptrend. FXI recently encountered resistance at the $40 level, and since then the ETF has staged a healthy correction, pulling back to and establishing support right around $36 a share [see FXI Technicals].
Conservative investors may wish to wait until FXI establishes definitive support above its 200-day moving average (yellow line), or $38 a share, before jumping in long. If FXI fails to hold above $36 a share, selling pressures could accelerate and bring it down to the $34 level or perhaps even lower [see also Defensive Equity ETFs For Earnings Season].
If China GDP blows past expectations, buying euphoria could sweep over both foreign and domestic equity markets. In terms of upside, FXI has minor resistance around $38 a share followed by major resistance just above the $40 level. On the other hand, a worse-than-expected GDP report can easily tip this ETF south. If selling pressures prevail, FXI could lose its grip and re-test support at $34 a share, while a break below this level would be quite worrisome [see also 5 New, Noteworthy ETFs From Q1]. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.
Written By Stoyan Bojinov From ETF Database Disclosure: No Positions