Welcome to another edition of The Market’s Compass Emerging Market’s Country ETF Study, now in its impressive 537th week. This study is dedicated to exploring the technical shifts observed in the 20 emerging market country ETFs that are tracked weekly and then compiled into a detailed report every third week. Subscribers who have opted for the paid version will get access to the full, uncut edition of this week’s analysis directly in their inbox, while free subscribers can expect a snippet from time to time. Those who have signed up can also browse through previous reports on The Market’s Compass Substack Blog. Looking ahead, we’ll be releasing our Developed Markets Country ETF Study next week. Meanwhile, for enthusiasts of digital currency, you’ll be interested to know that the latest issue of The Market’s Compass Crypto Sweet Sixteen Study, covering the technical movements of sixteen major cryptocurrencies, was published this Sunday.
For those curious about our methodology in crafting the objective EM Country ETF Individual Technical Rankings, head over to the technical indicators section at www.themarketscompass.com and check out “em country etfs.”
Observations from last week showed the Total EM Technical Ranking or “TEMTR” experiencing a further dip of 8.99%, dropping to 496 from 545. This comes on the heels of an 11.09% decline just a week prior, from 613 squarely three weeks ago. Among the segments, the Asia-Pacific EM Ranking took the largest hit, dropping 15.7% to 153.5 from 182 the prior week. Latin America’s EM Ranking saw an 8.6% decrease, falling to 171 from 187. The EMEA EM Total Technical Ranking posted the smallest decline, slipping 2.6% to 171.5 from 176. Of note is the iShares MSCI Turkey ETF (TUR), which has been on quite the volatile journey lately. It went from 34.5 three weeks ago to plummet by 30 points to 4.5 two weeks back, before recovering slightly to 7 last week. Below is a TUR’s daily candlestick chart with MACD on the lower panel for visual reference.
From the 20 EM Country ETFs tracked, six showed improvement in their TRs on a Week-over-Week basis, while fourteen declined. The average TR loss on the roster was 2.45%, a slight improvement on the previous week’s 3.40% average loss when thirteen ETFs saw declines. Currently, six EM Country ETFs are situated in the “green zone” with TRs ranging from 34.5 to 50, seven rest in the “blue zone” with TRs between 15.5 and 34, and another seven have fallen into the “red zone” with TRs of 0 to 15. This marks a slight slide compared to the previous week where eight were in the green, seven in the blue, and five in the red.
For detailed insights on how we assess The Technical Condition Factors, visit the technical indicators section on www.themarketscompass.com and navigate to “em country etfs.”
This past week, the Daily Momentum Technical Condition Factor (DMTCF) showed a reading of 32.86%, translating to 46 out of a potential 140 positive points. This figure dropped from the previous week’s 50.71%, which in turn was down from 75.71% three weeks ago.
As we leverage this as a confirmation instrument, if there’s a week-over-week increase in all eight TCFs, it indicates that more ETFs are improving technically, signaling a broader upswing. Conversely, a week-over-week drop across all eight TCFs affirms a wider downturn. This past week, we observed a rise in just two TCFs while six declined.
For a concise guide to interpreting RRG charts, check out the technical indicators section on www.themarketscompass.com under “em country etfs.” Additionally, for an in-depth understanding, do reference the postscripts and links at the blog’s end.
The accompanying chart below depicts relative data spanning three weeks—15 days—vs. the benchmark, the CCi30 Index, signified by the dotted nodes. To ensure clarity, not all 20 ETFs appear on this RRG Chart; however, those with notable technical interest remain.
After examining the iShares MSCI Turkey ETF (TUR) daily chart earlier this week, it’s clear that the sharp reversal in Relative Strength and Relative Strength Momentum isn’t unexpected. This past Monday, the TUR started to decline in the Leading Quadrant, losing relative strength momentum drastically as it swiftly descended into the Weakening Quadrant. By Tuesday, its pace increased, moving into the Lagging Quadrant. In a contrasting move over similar recent weeks, the iShares MSCI India Index ETF (INDA) has managed a steady climb from the Improving Quadrant into the Leading Quadrant. Similarly, the Global X FTSE Greece 20 ETF (REK) saw significant traction in the Leading Quadrant three weeks back but stalled and shifted to the Weakening Quadrant late last week.
For insights on The Total EM Technical Ranking Indicator and interpretation, head to the technical indicators page at www.themarketscompass.com selecting “em country etfs.”
The EEM has mostly traded sideways since February’s midpoint. While the TER notched a higher high three weeks ago, it has since declined; nevertheless, the 13-week exponential moving average remains on an upward trajectory post a light slump since the January 10th low of the TER. Delve deeper into EEM’s long-term technical standing in the accompanying Candlestick chart.
As a reflection of the Average Weekly Technical Ranking (ATR)—indicative of the mean Technical Ranking (TR) of our tracked 20 emerging markets country ETFs—it is presented in the lower panel of the EEM’s Weekly Candle Chart below. The ATR also serves as a confirmation/divergence or an overbought/oversold indicator alike.
The Weekly Candlestick Chart above more accurately paints the picture of the EEM’s sideways price trend over the past seven weeks, in contrast with the more extended line chart. Following a price pivot low week’s advance through January 17th—backing at Cloud support—the EEM recently surged within the perimeters of a long-held Standard Pitchfork (violet P1 through P3). A deliberate addition here is a shorter-term Standard Pitchfork (red P1 through P3). Even amid the sideways market, prices have consistently maintained support above the Upper Span of the Cloud and the Pitchfork’s Lower Parallel (displayed by a solid red lower line). MACD alludes to tempered upward price momentum while the Stochastic Momentum Index, meanwhile, has turned lower, dipping beneath its signal line. Only a strong rally taking prices beyond the 45.50 mark and traversing the Median Line (violet dotted line) of the longer-term Standard Pitchfork could prompt a more significant uptick, hinting at more than just a counter-trend rally.
Get acquainted with Pitchforks and Internal Lines through a three-part Pitchfork tutorial offered on The Market’s Compass website, www.themarketscompass.com.
Stay tuned for further insights on EEM’s technical conditions in the article titled Thoughts on the Short-Term Technical Condition of the EEM, but first…
Five of the 20 EM Country ETFs recorded gains last week on an absolute basis (notably, EZA remained flat), whereas fourteen dipped. Relatively speaking, fifteen EM ETFs outperformed EEM’s -1.82% loss. The average five-day absolute loss, including EEM, was -0.53%, overturning last week’s average absolute gain of +1.21%.
Towards the week’s end, EEM teetered on Daily Cloud support following a drop past the Kijun Plot on Friday. Presently, momentum oscillators and the Fisher Transform trend lower below their signal lines, while the EM Country ETF Daily Momentum/Breadth Oscillator consistently travels beneath both moving averages. Should the Cloud support cave, support targets are marked at the VAP band between 43 to 43.25.
All chart visualizations originate from Optuma, providing software that adeptly visualizes myriad data sets, including Objective Technical Rankings. For those inclined, here are introductory and advanced tutorials on RRG Charts…
https://www.optuma.com/videos/introduction-to-rrg/
https://www.optuma.com/videos/optuma-webinar-2-rrgs/
For a 30-day trial of Optuma Charting Software, head over to www.optuma.com/TMC.
