As The U.S., Grinds Higher

There were sharp gains during today’s session but behind the curtain, Emerging Markets (EEM), may be at the danger point.

Overall gains went from +1.68%, for the Q’s to a stiff +3.18%, for the SOXX.

That buoyancy allowed one to see EEM, was not performing in kind. Its daily gain was only +0.17% … way out of line from the rest.

That’s not the whole story.

The longer term daily close of EEM, shows the air’s been going out of this sector for a while.

Note the blue down-trend/support line and arrow; we’re at the danger point.

The second chart gets closer in on that area.

It’s clear, the market respects this trendline; no fewer than four direct hits and potential fifth (January 27th).

EEM: Going Forward

There may be more testing action at the underside or today’s test could be complete.

Wild percentage swings as seen today, are not the sign of a healthy market.

Even so, with all that upward action, EEM is weak and may be showing its hand.

Leveraged Inverse, EDZ:

Leveraged inverse fund EDZ, daily volume has picked up markedly over the past eight trading sessions.

Increased volume indicates potential opportunity; speculators are moving in and providing liquidity (not advice, not a recommendation).

Summary:

At tomorrow’s session, a new daily low for EEM (high for EDZ) may be the signal, we’re headed lower … possibly verifying an EEM, downtrend line.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279