Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

A Huge Opportunity For Emerging Market Stock Investors In 2021

Stock-Markets / Emerging Markets Aug 20, 2020 - 03:21 PM GMT

By: Avi_Gilburt

Stock-Markets

Back in early February of 2020, I warned those willing to listen that “Emerging Markets Look Sick,” which was actually the title of my article.

In fact, when I posted this article in early February, I was looking for a bounce off the 42 support region in EEM, with a target back up in the 44/45 region, which was expected to be a short-able bounce. You can see this outlined in the chart I presented within that article.

As you can see, the EEM struck a low just below 42, and bounced back up to a high of 44.84. This set up the big decline of which I was warning, with an ideal target of the 1.00 extension on the chart in the 31 region.


While the EEM followed the path I outlined in both directions on my chart almost perfectly, it did overshoot my ideal target of 31 when it hit a low of 30.10. So, whereas I was expecting a 31% decline in the EEM from the February rally high I was targeting, it extended another 2% beyond my downside expectation. While we always strive for perfection, we have to realize that we are dealing with non-linear environments. Therefore, we have to always adjust based upon what the market is telling us from a probabilistic perspective.

Once the market bottomed just a bit lower than our ideal target, it began the strong rally we have experienced since the end of March 2020. So, of course, this leaves us with the question as to what we can expect from the EEM in the coming years?

At times, I will publish the analysis that I present to the members of my services in a public article. So, this is the analysis I provided to our members over this past weekend:

At this point in time, I want to provide you with the weekly chart on the EEM. As you can see, it is sporting a series of 1’s and 2’s before it potentially begins the heart of a 3rd wave rally off its wave IV low struck in 2009. Therefore, it has a lot of catching up to do with the US equity markets in order to complete this proposed structure for wave V.

In the near term, it strongly argues for a wave [2] pullback before it potentially begins wave [3] of [iii] of 3 later this year. So, this chart provides further evidence supporting my expectation for more of a pullback to be seen before the next major rally phase takes hold.

Therefore, a corrective pullback into the 36-40 region in the EEM will likely be a long-term buying opportunity. The ideal target for wave [3] is in the 60 region, which is the 1.236 extension of waves [i] and [ii], which is a common target for wave [3] of [iii], which potentially can be struck within the next 12-18 months.

I know many of you are looking at the EEM chart potential, which points us well into the 3030’s, and wondering how this works within the overall US equity market perspective that we currently maintain. But, I want to caution you that it need not necessarily follow the US equity market. We have seen many periods of time where these markets have diverged from the US equity market.

Moreover, if you attempt to align the US equity market with the projected EEM structure, it is entirely possible that waves [iv] and [v] of wave 3 coincide with the [a] and [b] waves of the a-wave of [IV] on the monthly SPX chart, whereas wave 4 of the EEM chart can coincide with the [c] wave of the a-wave of [IV], with the wave 5 of the EEM chart coinciding with the b-wave of wave [IV]. Again, they do not necessarily have to line up, but it would be reasonable to see them play out in this manner. This would suggest that, overall, the EEM can move within the same directional bias as the US equity market, but it could outperform on the upside, whereas not perform as poorly on the downside moves.

Additionally, Lynn Alden Schwartzer, one of our all-star StockWaves analysts, noted this about my EEM analysis this past week:

“Fundamentals align with technicals here.

Emerging markets were way overvalued in 2007, with higher CAPE ratios than the 2000 US dotcom bubble in some cases. Since then, they have consolidated in this choppy sideways pattern as they continued to grow, causing valuations to come down and become somewhat low by historical standards.

There's plenty of room to run in the years ahead after they get through this potentially rough intermediate-term period.”

Lastly, I would be remiss in not at least outlining the risk inherent in this potential path for EEM. Garrett Patten, who runs our World Markets service, noted that the native stock market charts which comprise the EEM are not clearly indicative of this potential, due to the overlap we have seen over the last few years, as well as due the currency influences. So, there is certainly some risk in this potential path I am outlining, and I wanted to note that here.
In summation, I think the EEM could provide us with a nice long opportunity for the next few years, that is, after we see a pullback into the 36-40 region in the coming months. As it progresses through the years, I will continue to update the larger degree picture on the EEM, and outline our Fibonacci Pinball support levels as we move through the wave degrees on the chart. Should a Fibonacci Pinball support break within this structure in the coming years, then we will have to take Garrett’s warning extremely seriously. Until that happens, I intend on following the bullish path presented on the EEM for the coming years.

View my weekly chart accompanying this past weekend's article illustrating the long-term wave counts on the EEM.

Again, for those that do not understand the Fibonacci Pinball methodology of Elliott Wave analysis we utilize, I have published a 6-part series explaining our methodology some time ago for you to peruse, which will help you understand my analysis above:

https://www.elliottwavetrader.net/marketupdate/Elliott-Wave-Series-Part-1-201808184848063.html

Avi Gilburt is a widely followed Elliott Wave analyst and founder of ElliottWaveTrader.net, a live trading room featuring his analysis on the S&P 500, precious metals, oil & USD, plus a team of analysts covering a range of other markets. He recently founded FATRADER.com, a live forum featuring some of the top fundamental analysts online today to showcase research and elevate discussion for traders & investors interested in fundamental rather than technical analysis.

© 2020 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules