Four Potential Trading Opportunites In Global Market

October 26, 2022No Comments


Today we are going to be talking about some opportunities in the global markets. Now I have my StockCharts program. Many of you who study technical analysis probably subscribe to something like StockCharts, and they allow you to have different collections of stocks that you can use to regularly rifle through and look for opportunities. So I’ve got one for commodities, I’ve got one for international markets, I’ve got one for sectors on the US markets, sectors on the Canadian markets, etc. So I have a process of periodically rifling through these collections of charts looking for opportunities. If you’ve ever taken my technical analysis course, you know that an opportunity can come in the form of either a range-bound security that moves up and down in a pretty defined trading range, or it can take place in the way of a breakout.

So let’s say a stock was maybe in a bit of a down trend and broke out, that’s another opportunity. And then the third thing is to look for an uptrend where there’s a trendline test. So the markets come down a bit, tested successfully off of a trendline, and that can be an opportunity as well. My favorite way of trading stocks is in range bound type of securities. Because we’re in the midst of a bear market right now, it’s pretty hard to find a lot of uptrending stocks and uptrending ETFs and uptrending global market indices. You can find a few, not many, but a few sideways trading stocks, which are really fantastic for trading in and out of. I literally went through every major country index in the world, and I found four such opportunities. So not many of them, but they’re there. There are four opportunities that I have identified for you to consider. So let’s get started with Chile.

Now, again, these are not the only ETFs out there that represent these countries. You can go online and you’ll probably find half a dozen of ETFs that represent these countries. I’m using, for the most part, the iShares or sometimes you use the SPDRs because they’re very well traded and well known, and it’s just easy for me to keep track of on my list. So Chile has been in a sideways consolidation period, literally since the Covid crash and the market was moving down on Chile and then, you know, it washed out in that Covid crash. Since then, the ETF has found a floor somewhere around $21-$22 and has found a ceiling pretty neat and tidy somewhere around $30 to $31. Again, with any trending or range bound or what have you type of pattern, you are going to see what we call spikes and tails. Every once in a while you’re going to get a break of the pattern. And you had a break in early 2021.

So we did get a spike early ’21, but for the most part, if you looked at trading this particular ETF somewhere out near $30 and somewhere in in the low twenties, you could be making money. The beauty of a sideways trading stock is you know your parameters. So if it breaks to the downside, say you ended up buying Chile somewhere around, today, $23. I’m looking at it on, I think it’s 16 or 17 of October, and let’s say you bought it around $23. Well, that’s great. You want to trade it out to 30, but what if it fails? Well, fine. We had a failure back early in 2022, but it didn’t last that long. So you might know my rule of three. If $22 or so breaks by at least three days, but I typically look for much more than three days before I sell out, you will have a good stop loss point there so you can stop out if the stock doesn’t work out the way you planned. So it’s a pretty easy pattern. You know your upside, you know your downside, you know your stop point. So Chile did have that run in early ’21 because they are a commodity focused country.

And commodities were doing very well, oil and metals, during that year. They did top out and you can see sort of a sideways range since then, but not a bad trader and I do think the commodities will continue to do well. Mexico has had a couple of periods where there have been consolidation patterns. From ’18 to ’20 there was a consolidation pattern marked by these two black lines. And then after the Covid crash, there’s been another consolidation pattern between around $44 to $50 on this iShares ETF. Now there are lots of other Mexican ETFs, so you can look at them all, and I’m not particularly endorsing this one. As I said, it’s just the one I tend to look at. So the beautiful thing about these charts that we’re looking at is that we know that the market’s been in a down trend.

 

So if you look at the TSX or the S&P 500 or most indices anywhere in Europe, they’re going down. But these things are going sideways so they’re actually a fairly predictable pattern within a world of chaos, and that really interests me. Again Mexico right now is kind of near the bottom of its trading pattern, so interesting observation, and I think it’s it’s another one that’s definitely on my radar. Now, I don’t own either of the two stocks that we just talked about, but I do own this one, which is Brazil. We have been trading this pattern, and you can see that somewhere in the mid twenties is the place to buy. It’s been doing this for quite some time. I mean, literally going back in 2018 with that interruption by the Covid crash, but I almost write that off.

That was kind of an anomaly. So generally speaking, Brazil seems to have a high in the high thirties and have a low in the mid twenties, and it’s a pretty darn tradeable ETF and it’s a pretty darn tradeable country. Now they have a major position in Petrobras, which is an oil and gas producer. I think it’s 30% of that index, if I’m not mistaken. So obviously you’re looking at oil prices when you’re looking at this particular ETF. But nevertheless, you probably know that I’m bullish on commodities in the longer run, so I don’t mind holding this and if on some potential it broke out past that high 30 point, I’d be a holder. More than likely though I expect to be selling it. It’s kind of in the middle of the range so the best opportunity on buying Brazil right now is probably past this, but there’s still some upside. Again, mind your stops. Keep tight stop losses on this stuff because if they break, you don’t want to be caught with a negative trade. Okay, finally, India.

Now back to the 2018 to ’20 area there was a consolidation pattern. Covid came along, boom and then here we are again. Notice the floor, the support level on this EFT. Again, it’s the iShares ETF. It is somewhere around 40 bucks is where this ETF likes to come down to and then it’ll move up. Now, unlike the other patterns we just looked at, it’s not sideways. It’s actually been in an declining trend very much like the S&P 500, but there’s much, much more of a defined floor on this. So my thoughts are, this is kind of looking to me like the stock will end up somewhere near $40 if the market continues to be soft on a global basis. But that will probably represent an opportunity for it. At the very least, a return to this declining trendline that I’ve drawn here.

In my opinion, India is a potential stock or potential ETF in the making. So it’s not one I’m buying, but it’s most certainly one that I’m watching because it could move up to the trendline and then it could break out eventually, which would be very bullish. So very worth watching. Not necessarily worth buying today. You don’t have to do your homework on all of these, but this maybe gave you four new ideas to consider for your watch list.

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