EM: Oversold Conditions Lead to Predictable Bounce


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Look at the EEM ETF tracking the MSCI EM Index and we can see that the panic of Monday ushered in a bounce that has taken the EEM from a kiss of $37.00 back to $38.50 (+3.7%). Emerging-markets What was predictable?

There is historical support for the stock at $36.75 - $37.00, where it spiked down in June of 2013 at the summer lows for ALL markets.  On that day 150m shares (vs. average daily trading volume of 38m) of the EEM traded in what was a capitulative move.

The ETF then rallied to $38.50 before another test lower, then traded higher into August.

Monday's volume was also capitulative but like the June move, around $38.50 the stock has pressure should be challenged to break back to $40.00 where it traded in mid January. sg2014020641226

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks

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