Sunday, February 26, 2017

It's Been Swell, But The Swelling Has Got To Come Down (EEM)

Emerging Markets (EEM) have virtually mirrored the general market and have been on a tear since December. I'm all for positive markets and trends but this is starting to get to some worrisome levels. On Friday I think we may have witnessed our first signs to take some profits off the table. On the 60 minute chart the EMA(9) crossed over the EMA(34) which triggered a sell. In the meantime the EMA(34) is no closing in on the EMA(89) for confirmation sell, but please no shorting until the EMA(89) crosses over the EMA(233). So long as the EMA(89) is over the EMA(233) we are still in a bullish market.
EEM has occupied a very narrow channel on the daily chart. I think this is just the beginning of a down-wave before it resumes it's move upwards again. Elliott Wave Theory published a great article on the general market and a very convincing case was made for near-term retracement with a further push up throughout Summer before a Fall correction. Some of that can been seen here in Emerging Markets and this may be the beginning of shallow near-term retracement. The parameters of this channel are poor but it appears as if it broke down Friday with the EMA(5) crossing downward and causing a sell trigger. We've had a good run, so please take money out as a precautionary measure.