Country exchange-traded funds (ETFs) provide a way to access foreign stocks and stock markets from a U.S. trading account. These ETFs provide alternative trading opportunities compared with domestic stock ETFs, as foreign markets aren't always correlated to U.S. indexes. For example, the iShares MSCI Singapore Capped (EWS) and iShares MSCI Poland Capped (EPOL) ETFs have been pulling back to support while the SPDR S&P 500 ETF (SPY) has surged to new highs. Still in uptrends, technicals point to buying opportunities in Singapore and Poland, where the prices are cheaper than they have been in the recent past.

The Singapore ETF has been in a strong uptrend throughout the year, hitting a high of $25.11 in July. It has pulled back since then, finding support above $24.18. All pullbacks throughout 2017 have been less than 4%, and the August/September pullback is also at slightly less than that level. The $24.18 support area also intersects with a rising trendline. Purchasing between $24.50 and $24.18 means a stop-loss can be placed slightly below $24.18, with a target near the top of the rising trend channel at $26.15. The trade setup provides a greater than 4:1 reward-to-risk ratio. EWS pays a 3.73% dividend and has average daily volume of 460,000 shares. (See also: Top 2 ETFs for Investing in Singapore.)

Technical chart showing the iShares MSCI Singapore ETF (EWS) pulling back within an uptrend

The Polish ETF has been trending higher all year and moving in a rising channel since March. The ETF is currently near the bottom of its trend channel, trading near support at $26. The rising trendline has provided a number of profitable buying opportunities over the past several months, which makes buying near $26 a viable option. Placing a stop-loss near $25.50 results in $0.50 of risk per share. Getting out near the top of the rising channel, at $28.75, means $2.75 of upside potential. With a reward-to-risk ratio on that trade as favorable as 5.5:1, the stop-loss can even be placed slightly lower to give the trade more room to move, which reduces the chance of getting prematurely stopped out on minor price fluctuations. The dividend yield for EPOL is 1.57%, and average daily volume clocks in at 237,000 shares. (For more, see: These International ETFs Are Trouncing the Competition.)

Technical chart showing the iShares MSCI Poland Capped (EPOL) ETF trading near trend channel support

The Bottom Line

While the S&P 500 has rallied to fresh highs, the Singapore and Poland ETFs have retreated to support. Given the rising trend, the pullbacks to support present potential buying opportunities. The risk/reward ratios on the trades are favorable, although there is always the possibility that the prices could keep falling or that the target will not be reached. Stop-loss orders are used to help control that downside risk. Another risk control measure traders can use is to risk only a small portion of account equity on any single trade. 

Charts courtesy of StockCharts.com. Disclosure: The author did not have positions in the aforementioned securities at the time of publication.

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