We keep a watch list of countries meeting our Stock and Interest Rate criteria and if they reach our entry prices we will buy them. We typically will only enter the top 5 on our list but depending on the geographic location of the countries, the macro-environment, valuation, and several other criteria we will buy other ones instead of or as well as the top 5. For a better idea of what goes into individual country criteria read this post on Singapore EWS.

We will go over our actual entries in greater depth in later posts. But essentially we look to buy in solid up-trends using breakouts and pullbacks. We are also addicted to risk management. If we can’t find a low risk entry we will wait. In our Newsletter we provide specific entries, exits, and stops for all of our positions. We don’t adhere to any profit target method but instead move our stops up as a position moves in our favor. We find this allows us to ride trends past where we “think” they should end while still using good risk management. As noted earlier we will cover a lot of this in later posts and cover it all in our Newsletter.

Back to the subject title here in order of geographic regions is our Long Global ETF/Closed End Fund watch list.

EWU-Great Britain ETF

EWQ- France ETF

EWG-Germany ETF

EWP-Spain ETF

EWL-Switzerland ETF

EWN-Netherlands ETF

VGK-Europe ETF

EWC-Canada ETF

EWH-Hong Kong ETF

EWS-Singapore ETF

INP-India ETF

RSX-Russia ETF

TKF-Turkey Closed End Fund

EWZ-Brazil ETF

If you have any questions, comments, ideas, etc. Feel free to contact us here.

Happy Trading,
The Macro Trader

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Here at TheMacroTrader.com we use several different strategies across several asset classes. Why do we do this? For several reasons not the least of which is so that we can find and exploit as many of the best risk to reward situations as possible. If you tie yourself to one strategy or one asset class you are limiting your potential opportunites.

In this article we will focus on using systems. As we have already mentioned we use several systems. Some are purely automatic. If they say buy we will go and buy if they say to sell we will sell. We also have several systems that leave us a lot of discretion as to what we do. We look at many different variables depending on the asset class and time horizon. For instance in some of our short term systems we only use prices of the actual instrument to determine buys and sells. On some of our longer term systems we use economic data such as interest rates, market valuations, technical studies, inflation, competing yields, etc.

Right now we have several systems for domestic and foreign equities, domestic bonds (treasuries, corporates, and junk), precious metals, currencies, commodities, volatility trading, and asset allocation. All of the systems we use have historically beaten their benchmarks with less risk. So over time we can expect to outperform.

As noted earlier we also have systems that leave us with varying amounts of discretion. Some of the systems are only used to alert us of a potential trade. We then go in and look to see if we feel it is worth doing. For instance one of our systems is designed to highlight potential option trades across several different indexes. Its main variable is volatility. While we could possibly use it as a stand alone system at this point in time we think it is better used to highlight potential opportunities.

So how do we use it? We update it every week and most weeks it will show us a few different areas worth looking at. We than go in and research those potential trades to assess the situation. If the right conditions are present and we can see a catalyst we will then go in and put on the trade. If not we will continue monitoring the situation in case it changes. While we only put on about a third of the trades that it presents us we feel it is an invaluable tool because it highlights many situations that we would otherwise miss. To sum it up in one sentence it highlights promising situations. That is but one example of using a systematic process in our trading.

In summary using systematic processes in trading allow us to cover more asset classes and more countries. It allows us to spot more opportunities and to more consistently achieve above average and less correlated returns.

Happy Trading,

The Macro Trader

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Looking over different countries we give a lot of weight to the interest rate environment. Most of the countries in Asia currently have rising interest rates. China, Hong Kong, and South Korea being notable examples. Singapore on the other hand has had stable and low rates for a while now. Another trend right now worldwide is that almost half of the 45+ countries we track have inverted yield curves. Asia is an exception to that as well with only Indonesia and Hong Kong having inverted rates. Needless to say Singapore does not have inverted rates.

The next big factor that we look at is the stock index trend. We don’t fight the trend. Falling knife syndrome has been known to cause huge losses and we just aren’t into that. Looking at the EWS chart it is in a definite uptrend and while it is not at the start of the trend as long as other conditions are favorable such as monetary trends, valuations, etc. we will look to buy on pullbacks and consolidations.

Another major factor in the fundamentals of a country is if it has surplus or deficits. Twin surpluses are good and twin deficits are bad. Singapore is a twin surplus country. Unfortunately the United States is a twin deficit country.

Valuations come into play especially on a relative basis. We look at P/E, P/S, and P/B ratios. In this case the P/E of the EWS is 16.29 versus the SP500 P/E of 17.67. We like it when the country is valued at or below the SP500.

We also like good news about the country. Not things like “XYZ index next stop 1,000,000 but positive things about its business environment and other positive influences. Here is one such positive for EWS Singapore is ranked the easiest country in the world to start a business.

While we look at several other factors we feel these are the most important. If there is anything that you would like a sample of feel free to e-mail us at Editor@TheMacroTrader.com

Happy Trading,
The Macro Trader

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