Emerging Markets May be Listening to the Pundits
- Posted by Greg Harmon
- on November 14th, 2012
Many traders and investors use the relationship between Emerging Markets ($EEM) and the S&P 500 ($SPY) as a gauge of of risk taking. Recently many have been lauding the Emerging Markets over the US Market, but not much has been happening. Looking at the chart below this metric is at a crucial level. After moving steadily higher since late 2010, the ratio of the S&P 500 to Emerging Markets has been consolidating since June. This is forming a descending triangle and a break below the base would trigger a target nearly 10% lower at 3.05. A relative move by Emerging
Markets of 10% against the S&P 500. At the extremes, this would take the Emerging Market ETF from its current level of 40.80 to 44.88, or the S&P 500 lower to 1237. Of course this could end up rebounding to the top of the triangle and breaking higher, into a bullish continuation. There is no play to be made until it breaks down through the triangle. The Relative Strength Index (RSI) and Moving Average Convergence Divergence indicator (MACD) support the break lower so focus there.
Join the Dragonfly Capital Views Premium Membership
Sign up here to get deeper analysis and nearly 50 trade ideas every week.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Premium Earnings 10-24-14
- Don’t Tell Merkel – The DAX is Below Critical Levels
- Thoughts on an Earnings Trade for Amazon
- Premium Earnings 10-23-14
- The Super Dollar’s Next Leg Up
- Listening to the Megaphone in CVS
- Premium Earnings 10-22-14
- Market Musings of a Non-Perma-Bull
- Trust, But Verify: Home Depot
- Dragonfly Capital Views Performance Through October 2014 Expiry