America may be known as the “land of opportunity” insofar as its more liberty / entrepreneur environment. That being said – the US stock market may have entered into a prolonged period of relative underperformance. Same too for the Canadian markets, given our less business friendly federal government and other challenges. Two opportunities outside of NA are particularly appealing to me as a diversification outside of NA.
The first opportunity, as discussed on this blog, is the emerging markets. I’d suggest you read that prior emerging markets blog to get a handle on how to evaluate the various ETF’s out there. ETF’s are not all the same–they vary in country mix or weightings within the countries that make up the emerging markets group. The chart below is an updated chart for the SPDR emerging markets ETF (EEM-US). Note the breakout—As I suggested we may get such a breakout on the prior emerging markets blog, this makes the sector appealing. EEM is now above the 200 day SMA again—adding to the appeal.
Next, lets look at the European markets. As noted in my emerging markets commentaries – there are many countries clustered together in a European ETF. Many different ETF’s are available, and most of them have different mixes of countries and weightings. Do your research – there is no “best” ETF for either of these opportunities. Further, just like with emerging markets, you can cherry pick the individual markets if you wish to focus on the best charts within the overall European markets.
So – with that in mind, lets take a high level view of the European markets via the iShares IEV chart, below. You’ll note that this chart is not as far along as is the EEM chart. It staged a rare “V” reversal- and is arguably not yet above its downtrend. The prior peak within the downtrend at $42.50 needs to be taken out. Its below its 200 day SMA. So, we might want to do what I suggested we do for the emerging markets last month…wait for confirmation of a break in the downtrend. A move above $42.50 for a few days would be good. A move above $43 (roughly where the 200 day SMA sits) would be even better.
The emerging markets look ripe for the picking. It’s a higher risk sector, so do use some discrepancy if you decide to buy an ETF in that market. Research the options, and weight the position accordingly. Its not a sector for those with low risk tolerance. Europe, meanwhile, probably needs some good news surrounding Brexit talks or who knows what in order to complete a bottom breakout. But, the chart will tell us when to buy in any case – so I am not going to stew too much about what that catalyst might be, or when it happens. It is looking very promising so far. Keep a sharp eye on this chart.
If you are in Florida as a visitor, a snowbird, or as a resident, you might like to attend the MoneyShow. I’ll be speaking at the Orlando MoneyShow this Friday Feb 8th at 3:00pm at the Omni Resort at Championsgate. If you haven’t been to that resort, it’s quite lovely–and parking is free! The link below references my talk:
Keith speaking at Ryerson
I’ll be speaking for a student Technical Analysis group at Ryerson University. This event is free and open to all students – I believe that you don’t have to be attending a Ryerson program. Contact the administrator for greater details. Details are on the link below: