A place to talk about speculative investing ideas for the optional Variable Portfolio
Moderator: Global Moderator
The EEM:SPY spread on the weekly chart is looking like it's trying to confirm a bottom, with a breakout this week. We are trying to close above prior resistance. We also have a short term uptrend in place both in price and relative strength (purples lines). Matter of fact there has been a bullish divergence going back to the Q4 2018 selloff. Look how RSI has been in an uptrend while price was continuing to go down until the bottom in May of this year. RSI is also decisively above 50, which is a level it's spent hardly any time in going all the way back to spring of 2018. We also have now 5 consecutive weeks closing above the 50 period SMA. Until this last 5 week period, we have had a total of only 2 weeks closed above the 50 period line going back to spring 2018. I would say all evidence in hand says probability is high of an emerging markets bottom, relative to the SPY. Even just a mean reversion to the 200 period SMA would be an ~11% out performance for EEM relative to SPY. My levered quant strategy currently has me pretty heavily into EM's. I have hope.
Gold nearing very important support level test. As you can see, we are about 1% away from the big July breakout level, where the rally really accelerated to the upside. We are also about 2% from the 200 day SMA. We are at about a 12% correction from the peak so far. I think this is a pretty important line in the sand. Could be a good area for anyone looking to "buy the dip". Chart has been extremely weak lately though, so be careful.