Mexico continues to show strength at the top of multiple relative comparisons.
The relative strength landscape for international equities has changed many times over the past year amid shifting geopolitical concerns, varying interest rate decisions, and local news headlines. This has produced notable rotation in our NDW Country Index RS Rankings. Some countries, like Ireland, Italy, and France, have shown consistent improvement on a month-over-month basis to advance from the bottom half of names into the top quartile. Other areas like Israel and Norway spent a prolonged period in favorable territory but now sit near the bottom of the rankings. In fact, Mexico is the only name that has maintained a position in the top quartile of the rankings for each of the past 12 months, having been in the top ten names since February 2022.
This relative strength has also been demonstrated by the iShares MSCI Mexico ETF EWW, which is also one of the highest-ranked funds in our World ETF Matrix. Like our NDW Country Index Matrix rankings, the World ETF Matrix is a premade matrix available on the research platform that simply looks at broad ETF representatives for global equity markets, including the U.S. and other regional representatives. EWW sits in the second-ranked position out of the 46 funds in that matrix (behind Greece GREK), and shows one of the higher X rankings of any country. This gives it the highest “total” rank of any of the names, which combines the count of buy signals and X columns into one aggregated score. While we typically focus on the buy ranking, the total ranking helps demonstrate the consistent nature of Mexico’s relative strength picture.
EWW showed rapid improvement from October 2022 until reaching a new multi-year high at $60 earlier this month. The fund then pulled back to give a sell signal at $55, however, we often see the first sell signal in a strong uptrend act as more of a mean reversion event that can lead to further improvement. This has been partially displayed over the past week, as EWW reversed back up into a column of X's before rising to $59 during intraday action on Wednesday. EWW carries a strong 5.77 fund score that bests the average Latin American fund (2.34) as well as the average non-US equity fund (3.39) and is paired with a positive 1.45 score direction. It is hard to find a more consistently strong area than what Mexico has demonstrated over the past several months, and the recent consolidation offers potential investors a more opportune entry point. Initial support can be seen at $55 with further support seen at $49.50.
