Helping Self-Directed Investors Succeed Blog - This African Nation ETF Displaying Attractive Technical Action as of January 10th, 2020

This African Nation ETF Displaying Attractive Technical Action as of January 10th, 2020

January 10th, 2020

Year 2020 has started off with plenty of possiblities and also uncertainties as well. The S&P 500 Tracking ETF (SPY) is up about +1.2% for the year. The NASDAQ Tracking ETF (ONEQ) continues to show leadership among the top 3 US benchmarks by gaining +2.31%. The Dow 30 Tracking ETF (DIA) is trailing with a moderate gain of about +1.1%.

The Middle East is back in the news for concerning reasons. While the US-Iran military skirmish is clearly in the back-burner for now, the larger Geo-Political moves occuring in the region are keeping investors on edge. Gold ETF (GLD) has risen +2.8% this year so far as investors are gravitating to this safe-haven.

Amid all these developments, international ETFS from emerging markets are finding more investor attraction. The Global X MSCI Nigeria ETF (NGE) is the strongest of the the lot as of now. In these early days of the year, NGE has already brought in a +10% price gain beating other leading ETFS by a wide margin. To note, NGE has been one of the weakest single-country ETFS in 2019.

From January 2018, NGE has been on a downtrend for two years - from a high of $27.10 to a low of $12.27. From November 2019, this ETF has been displaying attractive technical price action. After rising sharply above its key 10-week SMA in mid-November, it has been finding support above these levels. This past week, another sharp bounce above its 40-week SMA has brought the ETF to $14.82. With such heady gains in so short a time, some consolidation is not unreasonable to expect. But from a technical perspective a positive development will be if price doesn't fall back below its 10-week SMA line.

Nigeria's economy is one of the three largest economies in the African continent, perhaps arguably the largest. The nation's stock market is vibrant though not large. The economy is growing. While Crude Oil is an important source of income for the economy, the country seeks more diversification across different sectors. In a recent development, the Nigerian Central Bank has limited the purchase of high yielding treasury securities by opening it up only to banks. This has been cited as one of the reasons for the flight of capital into equities.

Self-directed investors will need to be cognizant of the clear and present risks of investing in emerging markets while keeping a close eye on this fast growing African nation's economy.

Good Luck and Happy Investing!

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