Watch Emerging Markets Closely For Signs Of Further Weakness (EEM)

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December 6, 2017 11:33am NYSE:EEM

From Chris Kimble: Year to date, Emerging markets (EEM) have lived up to their name, as they have emerged to gain much more than the S&P 500.

Of late, EEM was up nearly twice that of the S&P 500 this year (see YTD performance below):

Below looks at EEM over the past 8-years and how an important test could be taking place-

The chart above highlights that the trend in EEM over the past two years is up. It also highlights that the trend over the past 6-year is flat, as EEM is no higher of late than it was in 2011.

The strong 12-month rally in EEM saw it hit 2011 lower highs along line (1) three weeks ago as momentum was hitting the highest levels since the 2007 highs. The softness over the past couple of weeks has EEM attempting to break rising support at (2), while momentum is attempting to the do the same.

EEM has been in a leadership role the past two years. What it does at (2) could send an important message about Emerging markets and other global markets around the world.

Are emerging markets about to “Sub-merge?”

Two weeks soft action does NOT prove a trend change has taken place. Further weakness at (2), could bring on more selling, so keep a close eye on what EEM does the next couple of weeks.

The iShares MSCI Emerging Markets Index ETF (EEM) was trading at $45.16 per share on Wednesday morning, down $0.74 (-1.61%). Year-to-date, EEM has gained 29.59%, versus a 18.94% rise in the benchmark S&P 500 index during the same period.

EEM currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #3 of 86 ETFs in the Emerging Markets Equities ETFs category.

This article is brought to you courtesy of Kimble Charting Solutions.

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