Keep an Eye on EFA

March 7th, 2013

by Chris Kimble

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

EFA (iShares MSCI EAFE Index) is a diversified international ETF (see lower left box below). How these countries perform has many impacts on global growth and on the performance of the U.S. markets. Even though the S&P 500 has gained 13% since July of 2012, EFA has gained over 40% more in that time frame. Is EFA's performance important to the Global community? It would appear so!

The chart above suggests that EFA is facing numerous resistance lines at (1) and may be forming a multi-year "Head & Shoulders" topping pattern with EFA at the apex of the right shoulder.

Should we stick our head in the sand and ignore this pattern? I don't think investors should. Would EFA, the S&P 500 and the global community benefit from an upside breakout? YES!

This pattern has both bullish and bearish potential. Keep an eye on EFA and don't stick your head in the sand when it comes to this pattern and its possible impact!

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