Sunday, August 27, 2017

Emerging Markets Should Be The Future (Of Your Retirement Plans)

A stunningly beautiful friend of mine from South Africa and I were talking and she sounded surprised when I said how bullish I was of emerging markets (including South Africa). Yes these countries are all struggling with corruption and political instability of one form or another, but developed countries did so as well over a hundred years ago which is why I think this is their century. We forget the powerful civilising influence good ethical business has on a country that's struggling and what it does for giving people the means to get themselves out of poverty.

Below is Emerging Markets ETF EEM. I was looking at the long term chart over twenty years and from a price of $10 its now $45 which would have been a fabulous investment if you also factor in dividends. What I also noticed is that it appears to be putting in a massive ascending triangle and currently is sitting at resistance from tops put in 2007 and 2011. In terms of the bigger picture does this represent a moment of breakthrough or will it pullback before smashing through?

The daily picture looks a little less optimistic. Near term we need to be exercising some caution because all the indicators are almost euphoric. Stochastics and RSI are all above 90. We've had an uninterrupted ascent since the beginning of the year all of which was above the EMA(144). Currently the EMA's are still bullishly configured but in the channel I have attempted to draw we can see it is at upper resistance. The final peak of resistance is at just below $46 from back in 2007 with three touches on the upper band. Now is it not the time to be dipping your toe in Emerging Markets, but it should be a big part of anyones retirement fund.