Emerging Markets Ready For A Bounce (EEM)

From Dana Lyons: A popular emerging markets ETF is testing a potential key line of support.

Perhaps it’s because of the circles we frequent on financial social media, but it seems like there’s been a great deal of debate recently about the prospects for emerging markets (EM). Whether it’s a proposed turnaround in EM’s relative performance versus the developed world, or key chart levels being reached in EM indices and securities, we have seen a bunch of calls arguing for a pending resurgence in emerging markets. We can’t say whether these folks are right or not, but we did highlight a piece of evidence from that latter category above which may bolster the bull case.

Every week (usually, but not always, on Wednesday’s), we run a feature on Twitter called #TrendlineWednesday, highlighting some of the most important trendlines across the financial markets. Today’s edition included our Chart Of The Day, showing the iShares MSCI Emerging Markets ETF (ticker, EEM) hitting a potential key line of support.


As the chart indicates, the EEM is testing the top of the broken post-2007 Down trendline. That trendline stems from the 2007 all-time high and connects the peaks in 2011, 2014 and briefly 2017. Presently, the trendline is approaching the $41 level. A few days ago, the EEM did kiss the line, putting in a low of 41.13, before bouncing higher for a few days.

So is the EM bottom in? – and the long-awaited EM resurgence at hand? In a Premium Post at The Lyons Share, we run down our thoughts on the subject, including our key levels to watch – and perhaps a better indicator to watch for clues to a new EM bull market.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. FYI, our Pre-FALL Sale (25% OFF) is going on now so it’s a great time to sign up! Thanks for reading!

Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.

The iShares MSCI Emerging Markets Indx ETF (EEM) closed at $43.37 on Friday, up $0.79 (+1.86%). Year-to-date, EEM has declined -7.96%, versus a 8.17% rise in the benchmark S&P 500 index during the same period.

EEM currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #9 of 88 ETFs in the Emerging Markets Equities ETFs category.

This article is brought to you courtesy of Dana Lyons, JLFMI and My401kPro.