Always consider hidden risks
Emerging Markets (EEM ETF): Relative Breakout?
August 18 2016 ( From TradingView )
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A few charts below are worth a look: the iShares Emerging Markets
(EEM ETF in Candles - First Chart Below) compare to the iShares Core
SP500 (IVV ETF in the charts below showed in Bar Chart)...
The Emerging Markets (EEM ETF) started a Bullish Trend from the
post-Brexit panic on June 27 2016 to make a Breakout on June 26 2016
(from a Major Resistance Trendline that started back on May 20 2015
of an old Downward Channel). (See first chart below - Channel)On July 11 2016, it broke a Resistance Trendline on that Second Breakout Impulse (See First Chart Below - Red Trendline) and we are still since June 27 2016 within a tiny Uptrend Channel on EEM ETF.
(See First Chart Below - Uptrend Channel)EEM ETF is underperforming Tremendously since October 2010 (on a relative basis - ratio of EEM over IVV) and is still within a huge downward channel that started on October 2010. It reached an abysmal level in January 2016, levels last seen on a Relative Basis was way back in September 2004.
(See Second chart below - Amber Trendline)EEM ETF have been in a painful grind compare to the SP500 Index since January 20 2016.(See Second Chart Below) First sign of reversal on a relative basis will be when the 50 DMA (Day Moving Average - Red Line) will cross above the 200 DMA (Day Moving Average - Green Line) - it did on August 1 2016. (See Second Chart Below - Ellipse) But the Real Major Reversal will be when we finally break the downward channel on that ratio that started back in October 2010. (See Second Chart Below - Donwnard Channel - Ellipse) We are testing it now...Also quite interesting is the behavior lately of the EEM ETF and US Dollar Index (DXY). The EEM ETF is usually outperforming when DXY is weaker and vice versa... The Downtrend of the US Dollar Index since July 25 2016 did help tremendously the EEM cause...(See Third chart below - Ellipse)
And all that happening when the Emerging Market Currencies (CEW ETF) broke in Mid-July 2016 a Major Resistance Trendline of the week of March 09 2016. (Grey Trendline - Fourth Chart Below - Ellipse)
What strikes me the most is that as the Relative Volatility on Emerging Markets (Daily Ratio of the CBOE Emerging Markets ETF Volatility Index (VXEEM) to the SP500 Index Volatility (VIX)) is rising faster than the Volatility of the Mighty SP500 Index on adaily relative basis since June 24 2016 as shown by the fifth chart below. We are near the Resistance Trendline that started back since August 2015!
That is a typical behavior of a market trying a Major Relative Breakout. Emerging Markets ETF EEM is a must follow into the next trading sessions. A weak US Dollar can help the situation...
iShares MSCI Emerging Markets ETF (EEM) ( DailyCandles / Right Scale )
Emerging Markets (EEM ETF): Relative Breakout? $SPY, $EEM #Trading #investing #eem #SP500
iShares MSCI Emerging Markets ETF (EEM) over
iShares Core SP500 ETF (IVV)
20 DMA ( Day Moving Average - Yellow Line )
50 DMA ( Day Moving Average - Red Line )
200 DMA ( Day Moving Average - Green Line )
EEM (Top Panel)
EEM over DXY (Middle Panel)
US Dollar Index (DXY - Bottom Panel)
CBOE Emerging Markets ETF Volatility Index (VXEEM)
SP500 Index Volatility (VIX)
CEW ETF (Wisdomtree Emerging Market Currency - Candles Daily)
EEM ETF (iShares MSCI Emerging Market - Blue Line Daily)