Finding opportunities in International markets

May 7, 2021No Comments

Today we are going to be looking at international markets. These charts are under one of two categories: charts that are either breaking out from levels of consolidation to all new highs, or charts that have been basing and look like they’ll either be breaking out soon, I hope, or are already breaking out and showing potential that they could lead into gigantic base breakout potentials.

These days we want to look at international markets a little closer given how overbought many of the markets are, both internationally, and here in North America. There are still some gems out there. There are still some opportunities. So, we want to look at those opportunities and be prepared so that should they break out, or should they show signs of emerging from bases, to jump in on those trades.

This is the Hong Kong chart, and this is one of the candidates for large breakouts, past old lids of resistance. As you can see that this is the ETF, the Hong Kong ETF, EDW H and there is some form of a lid around $25 a share really going back to 2018, somewhere in the mid-twenties, this ETF could not break out. Look what’s happened it’s broken out and maybe a little bit overbought that’s the 200 day moving average. And it is a good, probably 15% or 20% above that moving average, but the big breakouts like this usually result in further upside potential over time. So, this is one of those charts that looks pretty good, even if you wish to wait to see if it maybe evolves into a bit of a pullback and thus an opportunity.

Here’s another breakout candidate. Italy was in the news a good decade ago along with Portugal, Hungary, Italy, Greece, Spain etc. These were countries that were financially in crisis. They were and obviously their markets were under duress during that period of time. But now you can see that the Italian stock market has broken out from that lid that really had contained it again since 2018. And it’s fairly bullish when this kind of thing happens. Again, it’s a little over bought there’s your 200 day moving average. The ETF itself, which represents their index is quite a bit above that that speaks to a potential of a pullback to that average.

You can see that usually when this kind of thing happens when the market was quite a bit above the moving average it corrects itself, either going sideways, or in some cases, a literal downside correction, this kind of thing happens. But in an opportunity where you get a giant breakout like this, usually any kind of a pullback, as long as it doesn’t break the old neckline of the pullback can be very bullish. So again, it’s one to keep an eye on, not necessarily to buy today, but it’s definitely a very interesting and, and possibly bullish looking chart.

The next one is Belgium. And as a cyclist and a bicycle racer myself, I’m aware of the racing scene in Belgium. They’re very famous for what’s called cyclocross bicycle racing. They’re a tough group of people in Belgium.  Their stock market shows that it’s broken out in the same kind of way. It’s broken its old highs, a game since 2018, not able to break somewhere in the low twenties. And now we’re seeing very positive movement. Same situation as the other two, well, above the 200-day moving average, I wouldn’t be surprised to see some sort of a pullback, but when you get a breakout where old resistance that usually implies the future is to see more upside.

So, these are stocks that to me look bullish from a breakout perspective. Now I want to look now at a few individual countries ETFs that are perhaps not at that breakout point, but are forming bases.

And if anybody has read my book Sideways, I talk about the four phases of a market, and one of them is a base. And then the next is a breakout into an uptrend. Typically when you get a base breakout, you have lots and lots of upside at to at least the old positions point. So we are looking at Malaysia right now, it could be argued that that would be some sort of a head and shoulders formation. Maybe not. I really don’t get tied up in the names of what bottom formations are, but there’s no doubt about it. There’s been a bit of a base going on. It’s kind of got a slap to the right. It’s been a bit of a negative base, but if this base can break and you see somewhere around $30 on, on this index ETF, you could be looking at, you know, the mid-thirties again, and maybe more.

So one could leg in a little at a time, if it does start to break even the high twenties where it is right now. It’s an interesting candidate to watch, not necessarily wanting to buy today because it has not broken out. Whereas this chart, which is Spain has broken out. Look at that base. There’s your correction back in March of 20 and then sideways and breakout. So again, very, very bullish. This implies a target to the old highs, somewhere in the low thirties, it’s out around 29 now, maybe 10% upside. But if that gets taken out, like some of the other indices that we were just looking at could be a long way to go. It’s an interesting looking chart for people that like base breakouts. And I do like base breakouts. I must admit.

Here’s another one. It’s Brazil. Now I will disclose that we own this ETF at ValueTrend in our equity and our aggressive  platforms . Brazil’s has had all kinds of COVID problems, but with problems come opportunities because COVID is not going to be around for the next hundred years. I would suspect that everybody’s going to be vaccinated across the world to a point where it’s at least controlled. And that should spell opportunity for countries like Brazil, who are producers of commodities. If you believe, as I do, in the inflation trade, which is not necessarily a short-term situation, whatever the next one or two years, Brazil’s a major producer, and that’s why we own this ETF. You can see it is making higher lows and higher highs. It’s a pretty good little chart and it recently broke out of a little base here. You can see there is the lid, it touched that’s the neckline touch tested and is successfully bouncing off to me, this target somewhere around the low forties. So, we like Brazil for both fundamental and technical reasons and we do own it right now.

Next week, on May the 12th, I am entering into a Canadian Society of Technical Analysts debate so to speak with my friend Brook Zachary. Now, you don’t usually debate with your friends, but it’ll be a good, good debate because Brooke is a seasonal expert. And I tend to focus on traditional technicals, which we both do, but I have a snap towards sentiment trading, as many of you might be aware.

Brook and I will be debating some of the sectors that he likes versus the sectors I like. Sometimes we’ll agree. Sometimes we may not, but it will be very good, and I think educational, event. Normally the Canadian Society of Technical Analysts does not let you participate in these events unless you’re a member, however, I’m going to be providing a link on my website where if you’re not a member, you can participate. I believe as a one-time guest and I, you know, I’m going to leave it to the CSTA to give you details on that, but that’s the way I understand it, if I’m wrong call me wrong. But I do believe that you will be able to get access to the event. And it’s at seven o’clock on May 12th, 7:00 PM, Eastern standard time.

I hope you can visit us. It will be held via Zoom so you’ll be able to see Brooke and I and we will be flashing back and forth between our charts on the share screen. So it should be interesting because we have two different perspectives and you know, it’s two different specialties, which I think is going to be a fun debate. I’m actually really looking forward to this. Brook is a very meticulous analyst. He’s a very smart guy. I’m excited about being on a program with him. I hope you can take the time to see that.

And until then we will see you again, hopefully on the 12th and if not our next video next Friday.

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