Dow Jones 9204.46 -62.05 2:10 pm PST, July 29, 2003  NASDAQ 1731.37 -3.99 For info, visit access.smallcapnetwork.com S & P 500 989.28 -7.24 To be removed, please click here Russell 2000 473.60 -0.23 VOLUME 03: ISSUE 41  Time to buy Japan? Maybe... Is it time to finally write-off Japan? Or is it time to buy?  The Nikkei has spent over a decade and a half moving down from a level of nearly 40,000 to a low in April 2003 of 7600, arguably one of the most blistering bear markets ever. Currently the 225 index in the land of the rising sun is flirting with 10,000. I smell a guarded opportunity. So for cheap and liquid exposure, let's have a look at yet another Exchange Traded Fund (ETF), the MSCI Japan ETF (AMEX: EWJ), one of several of the Amex-issued genus iShares. iShares are ETF's based on Morgan Stanley Capital International's (MSCI) country indices--the Japan offering closely following its proprietary Japan Index. There are several individual ETF's based on just about every country out there, and each is constructed--but not guaranteed--to mirror the overall activity of an international target market. Since most of us couldn't name 5 Japanese, or Belgian, or even Canadian, stocks, the vehicles provide a liquid, easily traded way to internationalize a portfolio. Beginning of the end, or... Over the past five years, the EWJ has flirted with $17 twice: once in 1996 and once in 2000. The low of $6.19 set on April 28th, 2003 seems a relatively strong support level, and the EWJ currently trades at around $7.75. One has to think that a bear market lasting almost 15 years and nuking 80 percent of a market's value should have a relatively decent bounce--if not a reversal-- in it. The EWJ holds mostly large cap Japanese stocks and, as with most ETF's, has an extremely low expense ratio (.84 percent). Net assets are over $1.5 billion. It is also one of the most actively traded of all the ETF's. Costs are restricted to the commission, as with the purchase and sale of any individual share. For volume watchers, the daily shares traded have increased exponentially since the beginning of 2003. There have been other rally attempts over the years, but this one looks different--especially with the large trading volume increases. Japan may actually be getting its act together as the country's rates rise for the first time in what seems like an eternity; industry and the economy may indeed be recovering.  It's not a matter of whether Japan's economy will reform, but when and under what plan? Something has to work. We may be at that point now. The past rallies seemed more technical in nature. This time, the rise appears much more robust. If one looks at a long- term chart, the 1998 to 2000 rally moved the Nikkei up 60 percent. The Japan iShare moved from $8 to $16--a 100 percent gain. Technically, EWJ has been in a nice steady uptrend since late April 2003. The stock broke out on a huge run up earlier this month and has since pulled back nicely to its current trend-line. Could well be a good time to take a position. Inky dinky SPDR... The main difference between SPDR's (spiders, covered in our last piece) and iShares is simply S&P 500 stocks versus countries--Although there are bond iShares.  As the driving force in ETF's, the AMEX has developed a bevy of securities that are reflective of their underlying benchmarks, cheap to trade and, above all, liquid. With spreads--for the most part--of a penny, one wonders why anyone would trade industry or country specific Mutual funds, with their high costs, fees and, in some cases, questionable 'active' management.  Then, of course, there's the exemption ETF's enjoy from the uptick rule that can frustrate short sellers in a volatile market. Most fund managers can't short stocks and rarely beat their benchmarks.  With markets looking perkier, a selection of ETF's may suit those investors--dare I say, especially small cappers--who want diverse equity exposure but lack the time or interest to select domestic or international individual big caps. Have a look at the EWJ or the iShare trading against the country of your choice. It's a big --and potentially profitable --world out there. Got questions or comments? Send 'em here: editor@smallcapnetwork.com Unsubscribe Here D I S C L A I M E R : The SmallCap Digest is an independent electronic publication committed to providing our readers with factual information on selected  publicly traded companies. SmallCap Digest is not a registered investment advisor or broker-dealer. 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