EWJ’s moving average
On November 18, 75% of the portfolio holdings of the iShares MSCI Japan ETF (EWJ) closed above their 100-day moving averages—up from 66% on November 17. Also, 88% of the portfolio holdings closed above their 50-day moving averages—up from 76% on November 17. Meanwhile, 58% of the portfolio holdings closed above their 20-day moving averages—up from 52% on November 17. The change in the portfolio holdings shows that most holdings were moving towards an uptrend by maintaining these moving averages as strong support points.
The moving average is a trend-following indicator. It’s also known as a “lagging indicator” because it’s calculated based on the past price performance.
Auto manufacturing giant Toyota (TM) was 4% above the 50-day moving average and 1.5% above the 20-day moving average. However, it was 0.57% below the 100-day moving average. Softbank Group (SFTBY) was 4% above the 50-day moving average. It was 0.96% below 20-day moving average and 1.8% below the 100-day moving average. Toyota accounts for 4.9% of the portfolio of the Wisdom Tree Japan Hedged Equity Fund (DXJ).
The above graph shows the percentage of EWJ’s portfolio holdings that were above their 100-day, 50-day, and 20-day moving averages. The graph also shows a RSI (Relative Strength Index) analysis.
For EWJ, 94% of its portfolio holdings were in the 30–70 RSI range on November 18—compared to 90% on November 17. This indicates that there were minor changes in the “overbought” or “oversold” area.
Meanwhile, 6% of EWJ’s portfolio holdings had an RSI of above 70. None of the portfolio holdings had an RSI below 30. The RSI is a technical indicator. It’s used to determine the “overbought” or “oversold” status of a stock. If the RSI is above 70, it indicates that a stock is overbought. If the RSI is below 30, it indicates that a stock is oversold.
In the next part of this series, we’ll analyze EWJ and its top performers with respect to the volatility and mean return.