What is a Text Book Bull Market?
It means prices move in a way it has been described in the textbook
Emerging market EEM is now up 80%+ in last 24 months
Yes this is how it looks:
EEM made a bottom in Jan 2016 around price of 28. People who follow Price Action do not look to buy bottom. They buy trending moves
Here's how the text book move started: A LARGE CANDLE MOVE IN FEB 2016
EEM Emerging market made a big candle move in Feb 2016 and then for a long time created a solid base at 31-32. A Large Candle move is always seen as Start of a new trend. This was the first buying Opportunity.
EEM rallied to 37.75 and then traded flat there. Reason: US Election. Textbook says: If you are fearful, take profits before a big event. This worked. Though there was lots of HOPE, the market got big jolt with Donald Trump Victory. There was massive sell-off and the Trend got disrupted
You cannot stop an idea whose time has come. The TREND started again in February 2017 with BREAKOUT
The Global recovery trade theme started gaining momentum in January 2017 and EEM made a strong comeback. All it needed was a new breakout above 37.5 for disrupted trend to resume again
Emerging market EEM did just that in Feb 2017
The Most important chart to keep an eye on: MSCI EEM pic.twitter.com/RwjfwxudFx
— Deepak Singh (@smarket) February 6, 2017
EEM broke out above 37.75 in Feb 2017 - remember it was earlier the resistance.
As you can see in the chart above, EEM created a TECHNICAL BUYING Opportunity during pullback in March at $38.This was the SECOND buying Opportunity
Post Breakout-Every Pullback to moving average is a fresh buying Opportunity
As you can see in the chart above, EEM created a TECHNICAL BUYING Opportunity during pullbacks to moving average.This was the Third buying Opportunity
The market moves from one resistance to the next WALL OF RESISTANCE
The Next wall of resistance was $45
EEM rallied to 45 and even broke past it.
When a trending asset breaks a solid resistance - then pullback to it becomes a buying Opportunity
I shared the above chart on Dec 06. Just see how EEM has rallied since Dec 06
This is another classic Text book move and now EEM is standing at another significant WALL OF RESISTANCE.
So, EEM Journey from levels of 31-32 to now 50 has been series of text book moves and this stock is a classic case study to understand how Price Action works
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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