Thursday, April 3, 2014

EEMs - is the buying done?

So there was talk this past month about how EMs were suddenly attractive. Apparently, nearly-uninvestable countries with terrible growth prospects and endemic corruption deserve higher P/Es than the market has been giving them.

Here is the investment thesis as commonly presented: rising rates and inflation and stagnating economies and massive capital outflows are good for EM growth, because potato.

So Wall Street Whitey bought EMs like crazy to close out the quarter, which means indiscriminately buying EEM.

So here's the chart:

Volume drove it +2SD and RSI(14)~70 for the last week of March. Now the indiscriminate buying is done, and reality sets in on the volume bars. I'd expect some sort of reversion to the SMA(50), but I dunno if you can make much money on it.

How's the weekly look?

Y'know, this actually doesn't look that bad - increasing volume thru 2012 failed to cave the price in. Now MACD has triggered up. Heck, maybe if it can get to $43-$44, it can go on a run?

I'm not particularly interested in going long EMs, with the caveat that I feel China shouldn't count as one anymore. Still, I'm interested in how these charts resolve.

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