The great thing about Technical Analysis is that it is dynamic. If you read my blog regularly, you will know that I really, really don’t like “thematic” opinion-orientated investment theories. Too many investors formulate a thesis on market directions – bullish or bearish. As I noted on Monday’s blog, you are better to be one with the market. In that way, you have no market theory that keeps you in or out of a trade. You go with the flow, baby!
Case in point. A couple of months ago, I blogged on potential sectors that investors might look at for tax loss selling purposes. One of the ETF’s I mentioned was the broad ranged Emerging Markets ETF. It was in a definitive downtrend. As, by the way, was the Emerging Markets bond index. .
My, how things can change! As you’ll note on the chart below – which is the iShares EEM equity chart – the Emerging Markets – as a collective- aren’t submerging any longer. In fact—they are very certainly basing. If you read my book Sideways, or look at this video that I produced a few years ago on formulating a buy/sell discipline, you will note that bases are indeed a wonderful thing. They set the stage for the ideal entry point for opportunistic investors like you and I.
On the EEM chart below, you will note that the current base is capped with a neartermed ceiling of around $41.50 –pretty close to where the ETF sits right now. Referring to my book or the video, you will note that a break through that base (count 3 days) could prove to be the beginning of a very bullish trend for EEM. Confirmation of the uptrend would come from a break through the 200 day SMA—and that might not take too long, given its current price point of just over $42. To me, this is a position that I am certainly watching for that potential entry point.
Take a look at the Emerging Markets Bond ETF, EMB. It’s even more attractive, having already broken out of its base. In fact, it’s already above the 200 day SMA. If anything, the ETF looks a little overbought at this moment. I’d bet that a short termed pullback is due on this ETF – which may provide an interesting entry point. Keep an eye open for that potential too!
Keith on Bloomberg/BNN TV Thursday January 24th, 2019 at 6:00pm
Keith appears regularly on BNN Bloomberg MarketCall to answer viewer questions on the technical analysis of stock trends, and to provide unique insights on the factors of technical analysis used in successful investment management. (Note: Times and Dates may be subject to change)
If you have questions about the technical analysis of stock trends for individual stocks, be sure to phone in with your questions for Keith during the show. Call Toll-Free 1-855-326-6266.
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Are you in Orlando in February?
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 on 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: