An Emerging Market Test

Emerging Markets have been moving higher all year. It has been a steady climb with some healthy pullbacks along the way. Just a series of higher highs and higher lows since January. That is when the Emerging Market ETF ($EEM) confirmed a double bottom. It is also the last time that the ETF was below its 100 day SMA. As markets head into early December, it is approaching that 100 day SMA again as it pulls back. Will it break through below?

The chart below offers several significant places to watch to discern the future of this ETF. First, it is approaching the long term support resistance zone that has been important of over 7 years. A move into that zone could be deemed a failed break out. That 100 day SMA is in the zone as well, and a push below it would create a short term lower low. The late September low is the next price to watch. Below that would be the first major lower low.

The RSI is giving some clues as well. It has stopped on pullbacks above 40 each time and is turning sideways there now signalling perhaps the end of the pullback. Although the MACD continues to move lower and is crossing below zero for the first time this year. The volume pattern is also noteworthy. The volume spiked as it touched the support resistance zone at the end of November. Since then it has fallen off, often a sign of exhaustion of selling.

The signals are certainly mixed in terms of their view of the future of the Emerging Market ETF. Time to tighten stops or add protection if you have enjoyed this ride higher.


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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.

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