Time To Sell Emerging Markets?

One of the technical analysis shops that we like to follow is All Star Charts. Chief Market Strategist J.C. Parets often points out trends that are developing before others catch on. Yesterday (January 26), J.C. put out a sell on emerging markets - and he pointed to the iShares MSCI Emerging Markets ETF (ticker: EEM) trending lower, especially its RSI value. At Excalibur Pro, we've seen weakness in this ETF and emerging markets develop over the past couple of months, and our data concurs with J.C. Over the course of two weeks (from Jan. 13 to Jan. 24), the RSI has gone from 71.2 to 45.07. That's a huge momentum shift in a short period of time. On top of that, at Excalibur Pro we look at regime change via the Markov Process and it has been sending fairly strong bearish signals for the past couple of months. J.C. believes that when the price dips below $45, which it has today, the ETF could be in for even more serious declines. While the strength of our bearish Markov signals has lessened recently, they are still pretty strong as measured by the number of days over the past month that EEM has generated a bearish signal above 0.8 (a very strong signal).

#RegimeChange, #Markov, #EmergingMarkets