Emerging Price Levels in Emerging Markets

In this world where it seems the only news that gets reported is bad news, there is often something new and exciting happening that goes unreported. We get bombarded everyday with political posturing, the latest cataclysm facing the financial markets and where LeBron should go as a free agent.Each vein has its reasons but that does not make them the full story. In Hawaii the lava flows that are burning houses are also what built the islands and are adding to the size of Hawaii.

The point, there can be a brighter side to a lot of these stories. And maybe that is the case for the Emerging Market ETF as well. It has been moving lower, fast and furious at first, and then in a steady movement, since late January. When the calendar turned to June it accelerated to the downside. Below its 200 day SMA for over a month, this ETF is doomed and the stories have emerged as to why it will never recover.

But is there an emerging opportunity in this ETF? Perhaps. For now the ETF has retraced 50% of its move higher that started in December 2016. The short term story is a Hammer Candlestick, which can be confirmed as a reversal with a move higher Tuesday. Maybe not enough to get long term investors excited. But every reversal emerges from a small start like lava flowing and building upon itself. It will take a move back over 45.50 to get most involved again. And a move under 40.87 would signal a bigger problem.

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