Emerging Markets about to “Sub-Merge?”

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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)-

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

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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.

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.

 

Chart pattern analysis with brief commentary:   

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