EWJ, GLD – Weekly ETF Fund Flows
Today we’re taking a look at ETF fund flows in – iShares MSCI Japan (EWJ) and SPDR Gold (GLD).
ETF fund flows are a valuable indicator of what traders are thinking. It takes a lot of buying or selling to drive millions of dollars into or out of individual ETFs.
This is something traders can use to find trends and gauge investor sentiment. And it can help you pinpoint which ETFs could be next to make a big move higher or lower.
Let’s take a look at the two ETFs that led the way in net inflows and net outflows from April 8th to April 12th.
iShares MSCI Japan (EWJ) led all ETFs with $1.4 billion in inflows last week. EWJ has $8.4 billion in assets under management. So the inflows represent a big surge for the Japan focused ETF.
EWJ is currently trading for $11.30 per share. The ETF is up 33% from the 52-week low of $8.47 and it’s just shy of the 52-week high of $11.44.
Investors are clearly looking at Japanese stocks as somewhere that could outperform.
The catalyst for the surge in investor demand is the Bank of Japan’s decision to weaken the yen. In fact, they’re going to double the country’s monetary base.
The hope is these unprecedented central bank moves will spark inflation in the Japanese economy that has been dealing with deflation for years. And more importantly for investors, it will fuel earnings growth for Japanese exporters.
At this point, the Japanese central bank is the most aggressive of all the central banks. And as long as they are, it should continue to draw investors into Japanese ETFs.
On the other hand, SPDR Gold (GLD) led the way with the most redemptions last week. More than $2.3 billion flowed out of GLD last week.
GLD is currently trading for $132.89 per share. The ETF has fallen 12% in just the past two trading days. GLD’s down a whopping 23% from the 52-week high of $174.07 and it’s now 7% below the previous 52-week low of $143.43.
The outflow isn’t surprising… GLD has had $9.7 billion in outflows so far this year.
Last week, gold broke below a key technical support around $1500. And it was also hit with a number of bearish analyst calls. And today all hell broke loose…
Gold prices plunged $130. The sharp decline triggered margin calls on traders in the futures market. And the cycle of selling drove prices even lower… anyone who read my commentary on Friday, Time To Go Short Gold, should be sitting on some tidy profits today.
One thing’s for sure, the outflows from GLD gave us a clear indication that investor sentiment toward gold had taken a bearish turn. Investors who heeded those warnings had an opportunity to sell GLD before the bottom fell out.
What’s more, the spike in outflows, along with the technical breakdown in gold prices, gave traders a clear signal to short gold. Or as I pointed out on Friday, you can use an inverse ETF like ProShares UltraShort Gold (GLL) to profit from falling gold prices.
That wraps up the weekly ETF fund flows for this week…
Keep in mind, there’s a lot of information of ETF fund flows. And it can be a very useful tool if you know what you’re looking for.
Good Investing,
Corey Williams
Category: Commodity ETFs, ETFs, Foreign Market ETFs, Inverse ETFs, Market Analysis, What's Going On?
