WEAK DOLLAR CONTINUES TO BOOST FOREIGN STOCK ETFS QUOTED IN DOLLARS -- EUROZONE ETF REACHES SIX-MONTH HIGH -- GERMANY ISHARES MAY BE BREAKING OUT -- THE NETHERLANDS ETF HITS NEW RECORD

EAFE ISHARES REACH SIX-MONTH HIGH... I wrote a message three weeks ago on Wednesday, July 22 to the effect that a weaker U.S. dollar was boosting foreign stocks ETFs that are quoted in dollars.   When American investors buy foreign stocks, they're also indirectly buying local currencies.   So they benefit when foreign stocks and their local currencies are rising together.  Which they're doing now.   The earlier message showed the euro rising to a new two-year high against the dollar which was having a bullish effect on eurozone stocks.   That can be seen in today's first chart.

The daily bars in the lower box in Chart 1 show the MSCI Eurozone iShares (EZU) reaching the highest level since February in today's trading.  That's a six month high.   The middle box plots a ratio of the EZU divided by the S&P 500 which has been rising since May.  That means that the EZU has been outperforming the U.S. over the last three months.   That's due mainly to the stronger euro which is plotted in the upper box.   It's clear that the two upper lines are moving in the same direction.  That's because one of the side effects of a weaker dollar is that it tends to drive money into foreign markets.   While stronger foreign currencies increase the appeal of foreign stocks.   And that dual relationship is seen more clearly in foreign ETFs which are quoted in weaker dollars.

GERMANY ISHARES NEAR BULLISH BREAKOUT...The next chart is taken from the July 22 message along with today's headline.   I'm repeating it today because that bullish breakout may be taking place.  The weekly bars in Chart 2 show the Germany iShares (EWG) trying to break through their early 2020 highs to reach the highest level in two years.  That would be a bullish breakout.  The EWG is trading over 30 for the first time since 2018.  A close at that level or higher would be a very positive sign for the largest economy in the eurozone.   Germany is the second biggest weight in the EZU at 29% which is second only to France's weight of 33%.   The Netherlands ETF (EWN) which has an EZU weight of 13% is already trading in record territory as shown in Chart 3.    Emerging markets in Asia are also experiencing some bullish breakouts of their own.    But I'll save that for a second message later today.