iShares Core MSCI EAFE ETF (IEFA) Sees Schaff Trend Cycle Trending Up

iShares Core MSCI EAFE ETF (IEFA) are being monitored this week as the Schaff Trend Cycle levels have shown a consistent uptrend over the course of the past 5 trading sessions.  If the levels breach the key 70 level, a market reversal will be likely, according to this signal.  

The Schaff indicator, created by Doug Schaff in 2008, behaves in a way like an oscillator, identifying overbought and oversold conditions in the market. These scenarios are then used to trade price reversals. A modification of the simple overbought or oversold trade setup is the addition of the 100-period exponential moving average, which is used by institutional traders as a very powerful support-resistance tool. The Stochastics oscillator is used to add confirmation to the trade entry.

Oversold values are 0 to 20 and investors might look to buy dips in up trends when the signal line crosses up from below 20 to above 20. Overbought values are 70 to 100 and investors might look to sell rallies in downtrends when the signal line crosses down from above 80 to below 80.  

Active investors are typically interested in the factors that drive stock price movements. Buying an individual stock means that you own a piece of the company. The hope is that the company does very well and becomes highly profitable. A profitable company may decide to do various things with the profits. They may reinvest profits back into the business, or they may choose to pay shareholders dividends from those earnings. Sometimes stocks may eventually become undervalued or overvalued. Spotting these trends may lead to further examination or the underlying fundamentals of the company. A company that continues to disappoint on the earnings front may have some issues that need to be addressed. It is highly important to make sure all the research is done on a stock, especially if the investor is heavily weighted on the name. Sometimes earnings reports may be good, but the stock price does not reflect that. Having a good understanding of the entire picture may help investors better travel the winding stock market road.

Checking on some other popular technical levels, iShares Core MSCI EAFE ETF (IEFA) has a 14-day Commodity Channel Index (CCI) of 163.77. The CCI technical indicator can be employed to help figure out if a stock is entering overbought or oversold territory. CCI may also be used to help discover divergences that may signal reversal moves. A CCI closer to +100 may provide an overbought signal, and a CCI near -100 may provide an oversold signal.

Tracking other technical indicators, the 14-day RSI is presently standing at 69.33, the 7-day sits at 79.22, and the 3-day is resting at 92.33 for iShares Core MSCI EAFE ETF (IEFA). The Relative Strength Index (RSI) is a highly popular technical indicator. The RSI is computed base on the speed and direction of a stock’s price movement. The RSI is considered to be an internal strength indicator, not to be confused with relative strength which is compared to other stocks and indices. The RSI value will always move between 0 and 100. One of the most popular time frames using RSI is the 14-day.

Moving averages have the ability to be used as a powerful indicator for technical stock analysis. Following multiple time frames using moving averages can help investors figure out where the stock has been and help determine where it may be possibly going. The simple moving average is a mathematical calculation that takes the average price (mean) for a given amount of time. Currently, the 7-day moving average is sitting at 63.17.

Let’s take a further look at the Average Directional Index or ADX. The ADX measures the strength or weakness of a particular trend. Investors and traders may be looking to figure out if a stock is trending before employing a specific trading strategy. The ADX is typically used along with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) which point to the direction of the trend. The 14-day ADX for iShares Core MSCI EAFE ETF (IEFA) is currently at 15.07. In general, and ADX value from 0-25 would represent an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would signify a very strong trend, and a value of 75-100 would point to an extremely strong trend.

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