Chart Review: AAPL, EWZ, EWA

The stock market is oversold, so I am hunting for bullish setups in the charts. Apple (AAPL), the iShares MSCI Brazil Index Fund ETF (EWZ), and the iShares MSCI Australia Index Fund ETF (EWA) are a few of the charts that have caught my interest.

Apple (AAPL) plunged through dual supports and bounced right back all in the span of about two hours into the close. I strongly suspect many stops were taken out, ejecting sellers from their positions in AAPL. If Thursday’s lows can hold, AAPL may finally set up a firm floor for a decent oversold bounce.


Apple briefly plunges through dual supports before bouncing right back. This sets up great potential for a strong oversold bounce.
Apple briefly plunges through dual supports before bouncing right back. This sets up great potential for a strong oversold bounce.

If I had been paying attention, I might have made a speculative bet on June 325 calls in the middle of the plunge.

The iShares MSCI Brazil Index Fund ETF (EWZ) is trying to form a triple bottom for 2011. Triple bottoms are made to be broken, so I expect sooner than later EWZ will continue its move down and, perhaps, finally deliver the 20% correction from 52-week highs that will get me buying the ETF again (see “The ‘20% Rule’ Works Again on the Brazil Index Fund (EWZ)” for an explanation of my “20% rule” for buying EWZ). Such a drop is a tall order because it would represent a complete reversal of all the gains EWZ recorded in the wake of QE2’s unofficial start at the end of August last year.


EWZ walking a fine line of support at the 2011 lows
EWZ walking a fine line of support at the 2011 lows

I missed buying the iShares MSCI Australia Index Fund ETF (EWA) during the last correction. EWA made a nice bounce off the 200DMA. As EWA tests the 200DMA again, I am watching like a hawk for signs that a support has likely been established. I am very interested in increasing my exposure to Australia, and I feel under-invested with my small holdings in the ETF for the Australian dollar (FXA is my oldest position!).


EWA tests the 200DMA again, but it is considerably above its lows for 2011
EWA tests the 200DMA again, but it is considerably above its lows for 2011

Be careful out there!

Full disclosure: long FXA

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