I was short the EM’s but botched up the trade on a whipsaw just before EEM broke support for good. Hey, it happens. When EEM hit the measured target of 37 I took a long trade on the EMF fund. A modest profit was taken there, and per an NFTRH update yesterday I took a new bear position (EEV) at the high (on EEM, low on EEV). Risk on the trade is controlled by the respective resistance and support lines.
Guest Post by Doug Noland
The evolving EM crisis took a turn for the worse.
Backdrops conductive to crises can drag on for so long – sometimes seemingly forever – as if they’re moving in ultra-slow motion. Invariably, they lull most to sleep. Better yet, such environments even work to embolden the optimists. This is especially the case when policy measures are aggressively employed along the way, repeatedly holding the forces of crisis at bay. In the face of mounting risk, heightened risk-taking and leveraging often work only to exacerbate underlying fragilities. But eventually a critical juncture arrives where newfound momentum has things unwinding at a more frenetic pace. It is the nature of such things that most everyone gets caught totally unprepared.
The Emerging Markets ETF has continued down to confirm a break of support. And yes, I shorted the EM’s (per an NFTRH Update) a few moments after making the previous post noting the breakdown a few days ago. The target remains 37(ish).
Last year the Templeton Emerging Markets bond fund provided great gains. Now Templeton’s Mark Mobius has provided excellent 9% and 7% returns (Plus dividend income) on what are essentially mutual funds. I don’t want to get greedy.
I am still constructive on the Emerging Markets and Asia compared to US markets, but it is time to pare back on some positions now and evaluate. I still hold the Templeton Global Income fund, which is +5% since purchase and spitting off monthly income.