The dollar gave back a little ground in the past week. Seasonally, the dollar usually falls back a bit over the next 4 to 6 weeks. It's not much, only about 0.4% on average. But the US dollar index has fallen over the next 5 weeks in 15 out of the past 23 years.
So if the dollar falls, what tradable ETF rises? It turns out that Blackrock's iShares MSCI EAFE Index Fund ETF, symbol EFA, has gained over the next 5 weeks in 9 out of 13 years. The gain has averaged 3.3%, which is decent for a popular ETF over 5 weeks.
Looking at EFA's chart, it recently set a double bottom, has been ‘stepping' higher, and rebounded nicely off its 50-day moving average. Volume on up-close days is starting to overwhelm volume on down-close days, a sign that momentum is building.
The iShares site EFA page states “The iShares MSCI EAFE ETF seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada.“
And it states the advantages are:
1. Exposure to a broad range of companies in Europe, Australia, Asia, and the Far East
2. Convenient access to 900+ EAFE stocks
3. Use to diversify internationally and seek long-term growth in your portfolio
If you want to add some international exposure to your portfolio, right now EFA not only has a good seasonal track record, but a higher probability chart setup as well.
If you are an options trader, you will find the index has actively traded weekly, monthly, and LEAPS options.
Oh, and there's one more interesting thing. EFA pays a dividend. The current yield is about 3.4%. But what is interesting is how it pays the dividend. It's not a regular quarterly dividend like you see in most stocks. EFA tends to make 2 dividend payments a year – one around the end of December, and one around the end of June. Last year, the December 24th dividend payment was $0.5852 a share. But the July 2nd, 2014 dividend was $1.6762.
If you happen to hold EFA until at least late June of this year, which is only 3 months from now, and EFA pays a similar dividend, you could effectively get a 2.6% gain just from the dividend.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
Copyright (C) 2015 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com.
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