European / Eurozone Equity ETFs have lost -$23.7B in assets in 2016 via fund outflows. Recently, the outflows have been slowing. Over the past month, the group still saw outflows of -$506M, but this is considerably less than the pace seen earlier in the year.
Another International developed country saw comparable outflows. Japan ETFs saw -$12B outflows in 2016. These outflows slowed in October and Japan ETFs actually have seen inflows over the last month of +$1.3B.
Take a look at the DXJ ETF in the 1st chart – the WisdomTree Japan Hedged Equity Fund spent a considerable amount time moving sideways before the price action broke above the long term moving averages (50d, 100d, and 200d).
Similar to the outflows slowing down in the two regions, the HEDJ ETF has a comparable chart pattern taking shape (2nd chart). After several months of moving sideways, the price action has recently climbed above the major moving averages.
One point to consider is the ECB (European Central Bank) is meeting this morning. There may be currency fluctuations pre and post ECB meeting. The HEDJ neutralizes these currency moves by hedging out the euro currency exposure so one is left with a basket of European equities.
Considering that the price action in the HEDJ ETF is now above the 200d moving average and European ETF outflows have slowed, I think it sets up for a compelling long trade in HEDJ.
The Tribeca Trade Group Trade:
Go long HEDJ ETF or buy the May 57 strike calls @ $1.70(use the 200d moving average as a stop price)
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