Friday, May 3, 2013

Long term technical take/ EEM

Here is a long term chart of a classic triangle or coil pattern in EEM, the emerging markets ETF.

Emerging markets are just getting started. This is a function of demographics. The emerging markets are where the young people are. The emerging markets are where the cheaper laborers are. Unless the free market stance among the worlds developed economies changes, these people are going to have jobs, and the money from China will continue to flow into these economies.

IF these markets and economies continue to improve it will mean that the rest of the world is successfully creating more money/debt and will be spending it on things. China will work through it's problems and will create an increased standard of living for more of it's citizens. They will most likely do this by continued appreciation of their currency, giving their workers a raise in pay while slowing inflation. They will in this manner export the inflation they are feeling now. And as they increasingly turn to other currencies besides the US dollar the dollar will weaken and we will feel that inflation.

China and the asian countries have been exporting deflation for years. They cycle is changing.....
At first inflation feels goooood!

A long term chart:

It works to put on a position in the long term the same way as it works in a short term trade.

Buy on the way up as a move looks to be getting started, adding as it proves you right.
You know you are wrong if EEM moves below the neckline on that H&S.  I would be fully invested as the price goes to new all time highs.....

Time will tell.

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