We’ve been bullish on emerging markets all year long. Now we’ve got another reason to be bullish, a reason with a 100% positive track record over the last 14 years.

Last December, we presented our bullish thesis on the emerging markets and EEM, the iShares Emerging Markets ETF.

Five weeks ago we wrote our latest article revealing why we believe the path of least resistance is to the upside – even with EEM trading at all-time highs.

EEM triggered a Stock State Indicator (SSI) Entry Signal in August 2016. It twice touched just barely into the SSI Yellow Zone. The last brush was in December, but it has remained in the SSI Green Zone since then.

The Green Zone

: iShares MSCI Emerging Markets EEM SSI Entry Signal in August 2016

The previous all-time high for EEM was back on October 31, 2007, at just under $46 per share. This past Monday, it was above $47. It took 10 years for this ETF to make a new high.

Our time-cycle forecast has been very accurate and shows the uptrend should continue into the first part of 2018.

Time-cycle Forecast Reveals Uptrend with EEM Good into 2018
A big driver for the strength of EEM is its correlation to oil. Many of the emerging market nations are oil producers and there’s a strong positive correlation between the price of oil and the price of EEM.

Emerging Markets vs Crude Oil
The price of oil is at two-year highs and that is helping to keep EEM buoyed up.

And as I alluded to earlier, it’s one more good reason we’ve found to be bullish on emerging markets… a reason that has a 100% positive track record over the last 14 years.

If you’re feeling nervous about buying into emerging markets at new all-time highs, you’ll probably feel differently after you see this.

As with most everything we do here at TradeSmith, the idea is incredibly simple. Buy emerging markets on November 25th, sell on April 29th of the following year, and use the TradeStops Volatility Quotient (VQ) as the basis for your stop-loss strategy.

The Data

The VQ for EEM is currently 15.3%. As of today, with EEM trading at an all-time high, that puts the stop-loss on EEM at $39.86.

Here are the results of this trade going back to November 2003. Why did we use 2003 as our starting date? That’s the year that EEM began trading. Fourteen years of trading, fourteen years of positive results.

EEM Performance Results from 2013 to May 2017

One of the things I love about this opportunity is that it gives us all a great reason to buy into emerging markets even though EEM is currently trading at all-time highs.

The Takeaway

I’ve found that buying into new all-time highs is almost always hard to do psychologically and I know I’m not alone in that.

We’ve been bullish on emerging markets and on oil all year long. Those two themes are really starting to take off now and I expect that they will continue to positively reinforce each other.

This seasonal opportunity in EEM is another great to way to participate in this on-going “emerging” opportunity.

On a personal note, all of us here at TradeSmith are thankful for our blessings, both personally and professionally. We have seen our membership increase substantially this year as more people are finding that TradeStops is the answer for their most difficult investing questions.

We appreciate your support and will continue to work to give you the tools and services you need to be successful investors.

Regards,

Richard_Signature

Richard Smith, PhD
CEO & Founder, TradeStops