Emerging markets are not all the same!

EEM

 

China and India look bullish

I’ve blogged on a couple of favorite emerging markets lately. Specifically, I quite like the charts of the Shanghai (China) and India (Bombay) indexes (https://www.valuetrend.ca/?p=3341). Buying country specific ETF’s or even select ADR’s (or GDR’s) are a great way to get exposure to those countries. In fact, 2 of my recent top picks on BNN were ZCH-TSX (BMO China ETF) and TTM-US Tata Motors(of India).

Some may be tempted to consider investing in a broad emerging markets play via an ETF like the iShares ETF shown above. I would advise against this. Emerging markets are not correlated markets to each other. This is not like buying a sector, such as Canadian banks or consumer discretionary stocks, where most of the components of the sector move roughly in tandem. The emerging markets are as wide in chart patterns and trends as you could imagine. Thus, the broad emerging markets ETF has been trading choppy sideways—as the chart above shows us. My thoughts are that this pattern, or lack of pattern, will likely continue for some time.

 

RSX

 

The great Russian bear

Beyond the bullish patterns I’ve noted on the Chinese and Indian markets in my prior blogs and BNN appearances, I’ve recently spotted what could be a short trade on the Russian ETF, above. This ETF has broken a 6-year support level of around $23/share. Just like a long consolidation breakout to the upside can be very bullish, such breakdowns from long term support levels can suggest a major downtrend to come.

Fundamentals back this chart pattern: recent discussions between European leaders and Russian President Putin broke down, leaving the European leaders  to suggest that a new cold war may be in the cards. Shorting, of course, involves substantially more risk than a long trade, so act accordingly regarding your trading objectives. Either way, you will not likely want to go long on Russian stock markets at this time.

 

Free Technical Analysis Seminar with Keith Richards – compliments of Markham Village Library: Wednesday 7:00PM

This is my second speaking appearance at this library—and I can tell you that these guys do a bang-up job. The event is catered with a very nice spread – complements of the library, and the atmosphere is excellent. If you live anywhere near this area, I’d highly recommend attending this event!

It’s at: 6031 Hwy. 7 East, Markham, Ontario,   L3P 3A7 – Wednesday, November 26, 2014, 7:00 PM

2 Comments

  • hello Keith,

    how are you ,

    please let me know is good time to buy TTM right now and please tell me if the stock fall down what is the stop price to get out,

    thanks,

    your bnn loyal fan,

    ricky

    Reply
    • TTM is approaching the trend line. Likely a great entry point now or very soon. We like the stock fundamentally and expect it to be a good 1-3 year hold.

      Reply

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