Quick Look at EEM Emerging Market ETF June 26

Jun 26, 2009: 11:04 AM CST

Per reader request, let’s take a look at the current movement and structure in the EEM Emerging Markets ETF and see a possible fractal Elliott count as well as simple support levels to watch.

Notice first that the EEM (MSCI Emerging Markets) bottomed ahead of the US S&P 500 and has rallied stronger than the US (S&P was up roughly 40% while EEM peaked at roughly a 75% increase).

As this shows, Emerging Markets can be more volatile (and profitible during up-moves), so guard your risk closer.

We had a strong move off the early March lows that – so far – has terminated in early June.   A quick note on the Elliott structure – it probably counts better as a correction – but for now I’ll keep the main count as a 5-wave fractal structure that appears to be in a corrective “B” Wave up which is awaiting a “C” to come.  We’ll keep watching it closely.

The key thing to note is that price supported each time we tested the rising 20 day EMA (offering good low-risk buy-in opportunities) and now have finally formed a clean negative momentum divergence.  If this count is correct, the volume divergence has formed on the terminal (fractal) 5th wave which suggests a pullback/retracement is due – which appears to be what is happening.

Volume has held roughly steady, declining somewhat from March while the SPY and other US ETFs have clearly shown a negative volume divergence.

Key levels to watch:  If we break above $34, then odds are we’ll continue higher – but do be aware that – like the S&P 500 – a bearish head and shoulders pattern could be forming (placing us now in the right shoulder).  $33 could also be resistance due to the prior highs from May.

Otherwise, the $30 level is obvious support which, if broken, would lead to a possible continuation move lower.

Until then, let’s keep watching the chart for additional clues as they develop!

Corey Rosenbloom, CMT
Afraid to Trade.com

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4 Comments

4 Responses to “Quick Look at EEM Emerging Market ETF June 26”

  1. Dyugle Says:

    Sorry for the off topic post but the action of the S&P 500 seems interesting to me.
    After yesterdays rise does todays doji signify a top and if so what would be the best way to trade it?
    Thanks

  2. Matt Says:

    Is it possible that A-B-C has already been completed (the other day @ $30)? Or does corrective A have to fall between 3-4 wave on the pullback to be A before moving into B? Thanks.

  3. cherilynn stone Says:

    Great post! It helped me a lot!

  4. cherilynn stone Says:

    Great post! It helped me a lot!