The iShares MSCI ACWI ETF (Nasdaq: ACWI) bounced off of an upwardly sloped trend line this past week and has since turned higher. If the ETF continues to rally, it could be setting up a showdown at the $75 area.
First, the ACWI stands for All Country World Index. The ETF follows the index with equity investments in both developed and emerging market equities and in large-cap and mid-cap companies. To give you an idea of what types of holdings are in the ETF, the following table shows the top 10 holdings in terms of percentage of assets.
While the list is dominated by big name American companies like Apple, Microsoft, and Amazon, we also see an ETF that represents India’s overall market as well as Nestle.
Now that you have an idea of what the ETF’s holdings are made up of, let’s take a look at the chart.
We see on the daily chart that the ACWI tested the $75 area on three occasions in July before pulling back. The fund rallied from late August through mid-September and challenged the $75 level once again before pulling back in the last few weeks.
If we connect the lows from May and August, we get an upwardly sloped trend line and the fund came within a hair of that trend line this past week.
The overbought/oversold indicators hit oversold territory and then bounced at the end of the week. This certainly suggests that the fund is ready to rally again, but the $75 area is still looming as potential resistance once again. And we have to keep in mind that the third quarter earnings season will start next week.
In addition to the fund being oversold, the stock dropped below its lower Bollinger Band on October 01. According to the Tickeron technical analysis overview, in 39 of 41 cases where ACWI's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are 90%.
There is also this from Tickeron—the stochastic indicator suggests the ticker price trend may be in a reversal from a downtrend to an uptrend. In 43 of 51 cases where ACWI's stochastic indicator exited the oversold zone, it resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued uptrend are 84%.
The big jump on October 5 moved the ETF back above its 50-day moving average, which indicates a change from a downtrend to an uptrend. In 36 of 45 similar backtested cases where ACWI's price crossed above its 50-day moving average, its price rose further within the subsequent month. The odds of a continued uptrend are 80%.
In order to get an idea of how the top holdings in the ACWI rank with their fundamentals, I ran the eight U.S. stocks on the list through Invest0r’s Business Daily scans—excluding Nestle and the India ETF. The average EPS rating for the other eight was 79.5 and that indicates pretty strong earnings growth for the group as a whole. All but one of the eight stocks got an A rating in the SMR category with the lone exception being Facebook which has a B rating.
Given this information, the ACWI’s top holdings certainly appear to have strong fundamentals at this time. That could bode well for the fund as we enter the next phase of earnings’ releases. Don’t be surprised if the fund breaks through the $75 level.
The 10-day moving average for ACWI crossed bearishly below the 50-day moving average on April 19, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 13 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 65 cases where ACWI's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
ACWI moved below its 50-day moving average on April 30, 2024 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ACWI declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where ACWI's RSI Indicator exited the oversold zone, of 28 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on April 26, 2024. You may want to consider a long position or call options on ACWI as a result. In of 72 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for ACWI just turned positive on May 02, 2024. Looking at past instances where ACWI's MACD turned positive, the stock continued to rise in of 49 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where ACWI advanced for three days, in of 368 cases, the price rose further within the following month. The odds of a continued upward trend are .
ACWI may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Aroon Indicator entered an Uptrend today. In of 373 cases where ACWI Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Category ForeignLargeBlend