The weekly chart reflects the unbroken 20/50 MA rise for the past 3 years and the sudden rise in volume that corresponded with the cratering of US equities and the search for investing (not trading) safe havens. Cleary not overbought technicals on the weekly chart With over 50% of the EWC net assets in energy and industrial materials, the dynamics in the commodities and energy need to be monitored. When $5 gets you a gallon of gas or a box of corn flakes (coming soon), EWC net asset value could show some legs. RIMM also accounts for 5% of the assets, currently at a new high on the NDX, and on a roll.. Gold is currently on a cyclical low and with over 7% of net assets in that sector a 15% rise would also significantly enhance the EWC. The Risk Bar above is a nifty little free tool courtesy of the NASDAQ which I have mentioned in previous posts. Interestingly, it gives the EWC a safer reading than XLE, perhaps because of the diversified character of the EWC. . .the reading on XLF is not surprising.
Open interest in EWC options is just plain dismal. The largest strike position is the September 33 calls (2,903) (June chart shown above), which is probably a buy/write situation as they are currently $2.35. With the EWC at 33.75, the Sept return is 4.7% with a break even at 31.40. That's not a bad bet for the summer doldrums months (which some other folks have apparently already figured out). These options are not for active traders as spreads are typically .25 and it's not unusual to have zero daily contract volume in all but a few strikes. Limited participation of the option exchanges also puts a damper on liquidity and the willingness to fill limit orders.
Finally, short interest is showing little negative sentiment, having maintained an envelop of support and resistance since 2004, with the exception of a few squirrely months. The ratio is the number to keep a eye on here as the volume increase over the past 7 months otherwise distorts the absolute numbers.