We often get caught up in just looking at the largest countries when it comes to investing but it’s important to not lose sight of some of the peripheral country ETFs. Today we are going to look at the Market Vectors Indonesia ETF ($IDX).
Indonesia found support at the 200-day moving average, bouncing off of it four times in November, December, and February. This created a base for $IDX to rise almost 10% to where we are now. Yesterday we saw the Indonesia ETF break and close above previous resistance that was created in early 2012 near the $30 level. With the breakout we can see that momentum based on the RSI indicator has reached an oversold level. This doesn’t give us a red flag right away, it may give some traders some worry but all it is telling us is there have been enough buyers to create such a strong force of momentum to break above prior price resistance.
When looking at international ETFs I prefer to compare the performance to the All-Cap World Index ETF ($ACWI) to gain some perspective. $IDX has been underperforming the broad international ETF for the last year and a half. But on this breakout we have seen a shift in relative performance to begin to favor Indonesia. This shift has taken us to two falling trend lines on the ratio panel in the bottom of the chart. This doesn’t mean $IDX can’t continue to rise and test the previous high of $33 but it does throw some headwind at a possible advance.
What we could see take place is a re-test of what was once resistance and see if it can hold support at $30 while not losing momentum on any continued move higher and the relative performance to $ACWI follows through in rising above the two trend lines. This could signal that bulls haven’t left the stage quite yet and the break of resistance was in deed significant. We’ll see what price action dictates and if Indonesia can test its previous high from 2011.
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