US markets have been going gang busters, setting new highs seemingly every day. But that is not the same story in Emerging Markets. Yes, they have been moving higher, but they are still 25% below the 2007 peak. Will they ever make a new all-time high? Actually they just might be on their way there right now.
The chart below shows the price action in the iShares MSCI Emerging Markets (NYSE:EEM) since that 2007 high. The sharp move lower cut 68% off the value of the ETF. The move higher retraced over 78.6% of that down leg and then fell back. The next 4 years pounded against resistance at 45 before it failed and pushed back down to 28 at the start of 2016.
But since that low it has been marching higher. The price crossed the 200 week SMA and shorter term resistance in March of this year and has kept going. Now back at a 61.8% retracement of the original down leg it is moving higher again after a few weeks of consolidation.
The next big level is that $45 mark that held for 4 years. A push over that and the all-time high is not far away. The RSI remains bullish and strong and the MACD is positive and trending higher. Time to start paying attention if you missed the run over the last 18 months.
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