While there are numerous talking points for the renewed optimism for Japan’s economy, markets have interpreted the results positively, sending Japanese and Pacific basin related stocks and funds higher.
The NDW DALI Asset Class Rankings have witnessed jockeying by international and domestic equities for the top ranked asset class. While there are a number of themes contributing to the hot race for first place, among them is the recent uptick in technical strength from the Pacific region, primarily from Japan. After holding a snap election over the weekend, Japan’s Prime Minister Takaichi was able to pioneer a landslide win for her party, leading to the largest majority by any single party in the post-World War II era. While there are numerous talking points for the renewed optimism for Japan’s economy, markets have interpreted the results positively, sending Japanese and Pacific basin related stocks and funds higher.
An example of the recent positive run can be seen through the chart and technical picture of the Vanguard FTSE Pacific Fund (VPL), which marked a new all-time chart high at $104 during Tuesday’s (2/10) trading. On the default point and figure trend chart, VPL has maintained a buy signal and positive trend since April 2025. The new year kicked off with a third buy signal as shares have pushed to highs and an extended position, above the top of the 10-week trading band. The notable improvement during the past 10 months has led to superior relative strength against the market as defined by the S&P 500 Equal Weight Index (SPXEWI) and its peer group, defined by the iShares MSCI ACWI Ex-US ETF (ACWX). Encompassing all this has pushed VPL to match its highest fund score in roughly 20 years at 5.81 (out of 6).
As noted, the impressive run has pushed the fund (and other Pacific funds) into overbought territory, above the top of the 10-week trading band. For VPL, the current intraday during Tuesday’s (2/10) is the highest overbought level for the ETF in 29 years with data beginning in 1995. Given the historically overbought level at all-time highs, those bullish on the region will look for the fund to develop support in the upper $90s along with a normalization of the 10-week trading band before considering initial or additional exposure. A similar approach may be taken with other regions or international stocks that have witnessed a recent rally to an extended position. Support for VPL on its default trend chart can be found in the mid to upper $80s, while the bullish support line currently resides at $73.
