EEM

EEM (and XEM), Emerging markets

Hamilton

eem june 2011

Back in January it was anticipated that this ETF would not trade above roughly $50. So  far at least it has not. The pattern is fairly clear. An a-b-c in which the b is a very nice expanding triangle. The c wave travelled about 60% of the a –wave ( normal) and peaks at the appropriate time. Emerging markets are always the last investments to turn, if for no other reason than that no one really knows what is in them. The possibility of one more high is quite remote as it stands, so it should be high time to reduce one’s exposure.

EEM and XEM, emerging markets

Hamilton

When investors become more risk tolerant they invariable stray further away from home and rapidly forget the history of these markets. Here are the EEM (US) and XEM (Can,)

 eem 2011 xem 2011

Notice that we are at spitting distance to the double top line, after having completed either 5 or 3-waves up. On the Canadian version, the chart is shorter as this one has not been around that long, the rise from the low is a TEXT-BOOK 3-wave move up, perfectly symmetrical in that the C=A and the c=a in the B-leg itself. Time to move aside IMO.

Emerging Markets EEM, MSEMF.

Hamilton

Your neighbors grass always looks greener and the same kind of phenomenon occurs in the realm of investing. The further away from home, the more exotic the place the better it is. Part of the reason for this – apart from the lack of transparency -is that it takes a relatively small amount of additional investment to drive up the price by a disproportional amount. By the same token, the opposite also applies which is why I think it might just about be time to get to the sidelines. Here are two emerging market ETFs.

eem nov 2010 eem nov 2010 2

Both are close to double topping but are not quite there yet. Notice that ,where shown, both the RSI and the MACD are not confirming the latest up moves. More importantly, even if it is not perfectly clear what count fits the rise since the lows (could be an a-b-c x a-b-c correction or a 5th wave with 5 waves in it), it is fairly clear that there was an expanding triangle of approximately 10 months duration a little past the middle of the charts. These patterns occur only in 4th or b waves and are a.k.a. megaphones for pretty obvious reasons. As with all triangles the markets quite predictable return to , at least, the lowest point in the triangle or about 25+%. Not a good reason to stick around.

By the way, I have been dead wrong on this one before!

FAA and EEM, acronyms for airlines and emerging markets.

Hamilton

Airlines, have a capital structure that almost guarantees that at some point they will go bankrupt, and, if insanity is defined as doing something again and again in the expectation that the result will be different , only the insane would continue to own FAA. The case for the emerging markets is only marginally less compelling. Here are the charts.

FAAeem

  No analysis here, just a reminder how good things can be, for a while.