Ignoring This Market Is a Big Mistake

Investors don't seem to care. That probably includes you.

Certain areas of the world don't seem like exciting places to invest. And that makes noticing what's going on – and putting money to work – a tough hill to climb.

In the case I'll share today, that's a big mistake.

You see, it's not just a case of ignoring. Investors are fleeing this market in a big way...

It's not a market you'll read about often. But with sentiment hitting crazy levels, it's a place you need to consider right now.

History shows us that gains of 20%-plus are possible over the next year. And there's a simple way you can take advantage of it.

Let me explain...

I'm talking about Australian stocks.

Again, it's a market few investors consider. You probably haven't thought much about it either. But it's set up for big gains right now.

That's because investors have been getting out of Australian stocks.

We can see it through shares outstanding for the iShares MSCI Australia Fund (EWA). EWA holds more than 60 stocks from sectors all over Australia's market. So it's a good benchmark to gauge returns.

What's even more important about EWA is that it's able to create and liquidate shares based on investor demand...

When investors are clamoring to buy Australian stocks, EWA simply creates more shares to meet demand. And when demand is dwindling, EWA cuts the total number of shares.

This can give us a good idea of how investors feel about a certain market. And today, EWA's shares outstanding are near multiyear lows. Check it out...

You can see that investor demand has crashed in recent weeks. And it's down big over the last decade.

The chart also shows similar setups happening in 2014, 2015, 2019, and early 2020. Each of these cases led to a short-term jump in Australian stocks. Let's start in 2014...

EWA's shares outstanding had been falling for years before bottoming in March 2014. That extreme negative sentiment was a sign of a short-term opportunity. From March 2014 to early September that year, EWA rallied 12%.

We saw a similar story play out in late 2015. EWA's share count bottomed in August 2015. It was a glaring buy signal for contrarian investors. And a year later, EWA was up 21%.

The 2019 and 2020 instances were no exception. Shares outstanding bottomed in March 2019. EWA went on to rally 14% into January 2020.

The 2020 setup came during the depths of the pullback in March 2020. Shares outstanding bottomed right around the same time EWA did. Then, EWA really took off... rallying 91% to end the year.

Again, EWA's shares outstanding have crashed in recent weeks. Investors are giving up on this market. And that's setting up a buying opportunity for contrarian investors.

History says we could easily see 20%-plus gains in the coming months. And you have a simple way to take advantage of it through EWA.

The rest of the world is ignoring this opportunity. But that's a mistake. It's a smart contrarian bet... one that you should at least consider today.

Good investing,

Chris Igou

Further Reading

"It's hard to find a market that investors haven't fallen in love with these days," Chris writes. Investors are ignoring this European market today. And history says we could see outstanding gains... Read more here: Investors Hate This Booming European Market.

Most investors never venture outside of their native stocks because of "home-country bias." And that can mean missing out on excellent opportunities in other markets. Don't make that mistake today... Get the full story here: This Forgotten Market Has More Upside Ahead.

Market Notes
HIGHS AND LOWS

NEW HIGHS OF NOTE LAST WEEK

Hershey (HSY)… “Global Elite” chocolatier
Automatic Data Processing (ADP)… “World Dominator”
JPMorgan Chase (JPM)… financial giant
Anthem (ANTM)… health insurance
UnitedHealth (UNH)… health insurance
Intel (INTC)… chipmaker
Comcast (CMCSA)… cable TV
AutoZone (AZO)… auto parts
Advance Auto Parts (AAP)… auto parts
ABB (ABB)… automation
3M (MMM)… manufacturing
Stanley Black & Decker (SWK)… tools and storage
Dick’s Sporting Goods (DKS)… sporting goods
Expeditors International (EXPD)… logistics
Casella Waste Systems (CWST)… trash and recycling

NEW LOWS OF NOTE LAST WEEK

Not many… It’s a bull market, you know!