Financial Market followers are celebrating Dow Jones at 20K but here's one chart that has not got the attention it deserves. The Chart is of Emerging Market ETF EEM
Emerging market has rallied 10% in last one month. It has been pretty one way as you can see above
Emerging market EEM was in a pretty good shape earlier in the year 2016. This was the state of the EEM in October 2016 - a month before US election.
MSCI EEM (emerging markets ETF) is up more than 18 percent this year while large-cap U.S. stocks are up just 6 percent
— Deepak Singh (@smarket) October 11, 2016
Then, Donald Trump in a major upset defeated Hillary Clinton. His protectionist ideas sparked a sell-off in Emerging markets.
MSCI EEM Emerging market ETF pic.twitter.com/pblJwpBWJI
— Deepak Singh (@smarket) November 10, 2016
The sell off only accelerated in following few days.
The iShares MSCI Emerging Markets exchange-traded fund (EEM) is down approx 9% since Nov. 8/ Trump winning election
— Deepak Singh (@smarket) November 17, 2016
But then the price action took an interesting turn - EEM formed a double bottom around 34 and rallied. EEM is now very close near the same old resistance of 37.75.
Why Emerging market has rallied back to the resistance? I have no idea. As a price action follower - the market does look interesting and it would not be a bad idea to keep a close eye on what happens next. If EEM for whatever reason breaks past 37.75 - then one cannot rule out a powerful rally to $45. Will it happen - nobody knows. The Big question: Will EEM breaks past 37.75?
Nifty has benefited from this strong rally in Emerging market
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers