There was also fundamental fuel behind yesterday’s fire; U.S. GDP came in at an impressive 3.1%, prompting a broad-based rally on Wall Street as investors expressed joy over the better-than-expected economic growth reading.
Investors will turn their attention to the north later today as Canada’s GDP report hits the street before the opening bell at home. As such, our ETF to watch for the day is the iShares MSCI Canada Index Fund (NYSEARCA:EWC), which may gap in either direction depending on the markets’ reaction to the latest economic growth reading. Analysts are expecting Canada’s GDP to post growth of 1.2%, marking a modest improvement from the previous reading of 1.o% [see also 101 High Yielding ETFs For Every Dividend Investor].
EWC appears to have resumed its uptrend (blue line) since enduring a long and frustrating correction after peaking at $29.63 a share and bottoming out in mid-November of this year. This ETF was able to get back on track quite quickly, judging by the fact that it managed to stay under its 200-day moving average (yellow line) for only two full days before rebounding higher; what’s also encouraging is that this ETF has been able to hold its bullish gap from November 19, 2012 while continuing to trade higher along a steadily rising support line [see 5 Important ETF Lessons In Pictures].
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Recent price actions has been undeniably bullish, however, EWC could soon encounter heavy profit-taking pressures; investors looking to get in long at current levels should be aware of the major resistance level around $29.50 a share (red line), which EWC has failed to summit on several occasions this year [see The 5 Most Important Chart Patterns For ETF Traders].
If Canada’s latest GDP report beats analyst estimates, EWC could be in for a green day; in terms of upside, this ETF may face profit-taking pressures as it nears $29 a share. On the other hand, sluggish economic growth could welcome back the bears; in terms of downside, EWC has immediate support around $28 a share followed by the $27 level. 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
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