We’ve been bullish on emerging markets literally all year long … and it hasn’t been an easy call.
Now that EEM – the iShares Emerging Markets Index – is breaking through to new all-time highs, what’s next?
First, let’s revisit our emerging markets bullish thesis as we’ve published it over the course of this year.
- Last year, in December, we asked, “Brazil … Junk or Jewel?” We favored jewel.
- Then in May of this year we offered up “Another Chance to Samba with Brazil” after EWZ, the popular ETF covering Brazil, tanked 16% in a matter of days.
- In May again we predicted that “Emerging Markets are Headed to New Highs” and we highlighted the correlation between the emerging markets and oil prices.
New all-time highs in Emerging Markets are now here – and they’ve been a decade in the making. Take a look at this 15-year chart of EEM.
EEM is breaking through highs not seen since before the 2007 – 2008 market crash.
Earlier in my investing career, I would have looked at the chart above and thought, “Oh well. Missed that one. The party must be over.”
I don’t think that way anymore and neither should you. Let’s take an objective look at where EEM stands today.
EEM triggered a new Stock State Indicator (SSI) Entry signal in August 2016. It entered the SSI Yellow Zone twice in late 2016, but has been moving strongly higher in the SSI Green Zone since the beginning of this year.
Today, my investment philosophy is that the greenbacks are made in the Green Zone. EEM is solidly in the Green Zone today, and hasn’t even visited the Yellow Zone in nearly a year.
Our time-cycle forecast for EEM has been incredibly accurate. The forecast is telling us that EEM should remain strong for the next couple of months into early 2018.
Have a good weekend,