Welcome to week 579 of The Markets Compass Rising Markets ETF Survey. As all the time, I am specializing in technical adjustments within the 20 rising market ETFs that I observe weekly and publish each three weeks. Paid subscribers will obtain a condensed model of this week’s Rising Markets Nation ETF Survey of their registered e mail. Paid subscribers can entry previous publications by The Market’s Compass Substack Weblog. Subsequent week, I can be publishing The Market’s Compass Developed Market Nation ETF analysis. On Sunday, I revealed the newest version of “The Market’s Compass Crypto Candy Sixteen Examine,” a weekly publication that tracks technological adjustments in 16 large-capitalization cryptocurrencies.
This Morning Market’s Compass Rising Markets ETF research can be despatched to my common paid subscribers in addition to my free subscribers in a not-so-effective try and entice free subscribers to assist the analysis performed within the three ETF research and the weekly Crypto Candy Sixteen research.
To grasp the methodology used to assemble goal Rising Markets ETF Particular person Technical Rankings, please go to MC’s Technical Indicators web page. www.themarketscompass.com Then choose “em Nation ETF”. Beneath is a Cliff Notes model* of an entire rationalization of the methodology I exploit.
*The Technical Rating System is a quantitative strategy that makes use of a number of technical concerns, together with, however not restricted to, pattern, momentum, accumulation/distribution measures, and the relative power of 20 particular person Rising Markets ETFs, starting from 0 to 50. The Composite Rising Markets Technical Rating or “TEMTR” is the sum of 20 particular person TRs and might be seen as an overbought/oversold indicator and a confirming/non-confirming indicator. There are additionally total rankings by geographic area, which might be seen as relative weekly measurements.
Final week, the Complete Rising Markets Technical Rating (“TEMTR”) fell -3.27% to 724 from 748.5 the earlier week, down from 825.5 three weeks earlier within the week ending 2/23, and the best “TEMTR” since January 2021. The general Latin American Rising Markets rating fell probably the most among the many three geographic areas, dropping -5.6% to 212 from 224.5 the earlier week. The EMEA total rising market rating fell -5.3% from 246th to 233rd. The general Asia-Pacific rising market rating rose barely from 278th place final week to 279th place, a rise of 0.4%.
Six of the 20 rising market ETFs I observe on these pages have posted will increase of their technical rankings or TR over the previous week. 1 had no change and 13 had a lower in TR. Final week, 15 TRs have been within the “inexperienced zone” (TR 34.5-50), 4 within the “blue zone” (TR 15.5-34) and a couple of within the “purple zone” (TR 0-15). The common TR loss was -1.23. Compared, the common TR loss for the earlier week was -3.85. Presently, solely 2 TRs rose and 18 TRs fell. For the week ending February 23, 18 Rising Markets ETF TR shares ended the week within the “inexperienced zone,” one inventory ended the week within the “blue zone,” and one inventory ended the week within the “purple zone.”
*To grasp the construction of technical situation elements, go to the Market’s Compass web site. www.themarketscompass.com Go to MC’s technical indicators web page and choose “em nation etfs”.
Right here is the quick model of methods to calculate the technical situation issue…
There are eight Technical Situation Elements (“TCFs”), that are the sum of the technical situations of the 20 ETF TRs for every TCF query. The eight technical situation elements don’t ask the identical variety of questions. Subsequently, it’s calculated as a proportion. If the person measure of TCF is 100%, it signifies that all 20 ETFs meet the required TCF standards.
Final week, the Each day Momentum Technical Situation Issue (“DMTCF”) registered a studying of 38.57%, which corresponds to 54 out of a complete of 140 attainable constructive factors.
As a affirmation instrument, if all 8 TCFs improved week over week, extra of the 20 ETFs have been enhancing internally on a technical foundation, confirming that the general market would transfer greater (assume up/down calculations). Conversely, if all eight TCFs decline week-on-week, it confirms a decline within the total market. Final week, 2 shares in TCF rose, 5 shares fell, and 1 inventory remained unchanged.
The relative rotation graph, generally known as RRG, was developed by Julius de Kempenaer in 2004-2005. These charts are distinctive visualization instruments for relative power evaluation. Chartists can use RRG to investigate traits within the relative power of a number of securities towards a typical benchmark (on this case EEM), or to investigate traits within the relative power of one another over any interval of the previous three weeks (each day within the following instances). RRG’s capacity to plot relative efficiency on a single graph and present true rotation. All RRG charts use 4 quadrants to outline the 4 phases of relative traits. The Optuma RRG chart makes use of main (inexperienced), weakening (yellow), lagging (pink), enhancing (blue), after which again to main (inexperienced). True rotation is seen when a safety strikes from one quadrant to the opposite over time. That is only a transient rationalization of methods to interpret an RRG chart. For extra data, please see the put up script and hyperlinks on the finish of this weblog.
This RRG chart doesn’t plot all 20 ETFs. I did this for readability. People who I believe are of upper technical curiosity stay.
After weeks of enchancment in iShares MSCI Brazil Index ETF (EWZ) and Relative Energy Momentum, iShares MSCI Brazil Index ETF (EWZ), iShares MSCI Peru ETF (EPU) have reversed within the Main Quadrant, with EPU now under the lead, however as seen within the desk under, EPU nonetheless has the best relative power relative to EEM, regardless of each relative power and relative power momentum lowering. Weak quadrant. Earlier this yr, the iShares MSCI India Index Fund ETF (INDA) fell into the lagging quadrant, the place it struggled till per week in the past on Friday, when it turned upward and moved into the enhancing quadrant with spectacular relative power momentum over the weekend (notice the gap between the nodes every day). VanEck Vectors Vietnam ETF (VNM) and iShares India ETF (EIDO) each fell deeper into the lagging quadrant final week earlier than beginning to stabilize and hook into greater costs.
The Desk under offers relative power and relative power momentum measurements for the iShares MSCI Rising Markets Index ETF or EEM. This begins with final weekend’s readings and continues for 3 weeks. This contains measurements from the final survey for the week ending 1/16. If the Relative Energy Ratio or Relative Energy Momentum measurements have improved over the earlier week, we spotlight them in inexperienced. If there’s a contraction in both, will probably be highlighted in purple, and if both measurement has not modified, it’s going to stay black. The colour-coding system acts as a warmth map of the previous 4 Friday measurements, highlighting both continued enchancment, deterioration, or stagnation towards the benchmark EEM. The ETFs proven within the RRG chart above are highlighted in blue.
*”TEMTR” is the overall of 20 particular person rising market ETF technical rankings. It acts as an overbought or oversold, confirming/disconfirming indicator.
EEM ended the week at a weekly closing worth of 60.07, however as you’ll be able to see within the subsequent short-term weekly candlestick chart and each day candlestick chart, the long-term weekly closing worth line chart above doesn’t inform the whole image of the value motion. One factor we are able to see from the above is that TEMTR pulled out of overbought territory after confirming a brand new closing excessive and was testing assist at TEMTR’s still-rising 13-week exponential transferring common (purple line) on the finish of final week. Nonetheless, the transferring common continues to rise. Extra particulars to come back…
*Like “TEMTR”, “ATR” capabilities as an overbought/oversold, confirmed/unconfirmed indicator.
As famous within the feedback on the weekly line chart, two weeks in the past, EEM rose to an all-time intraweek excessive of 60.95, however was unable to interrupt above the higher warning line 2 (purple dotted line) of the long-term commonplace pitchfork (purple P1-P3), and the value ended close to this week’s low. Final week, the value began low however reversed and rose above the midline (gold dotted line) of the short-term Schiff Modified Pitchfork (gold dotted line), however reached a ceiling at UWL2 by the top of the week. The Rising Markets Whole Situation Issue Oscillator has retreated from overbought territory for the second consecutive week and has fallen under the five-week transferring common (purple line). The Common Rising Markets Technical Rating (backside panel) is analogous, however nonetheless above each transferring averages.
Study pitchforks and their applause with this three-part Pitchfork tutorial on the Market’s Compass web site. www.themarketscompass.com
For extra data on EEM technical necessities, please go to Ideas on the near-term technical panorama of EEM However first…
*Doesn’t embody dividends if there are any.
Final week, 14 of the 20 rising market ETFs rose in absolute phrases. One inventory remained unchanged and 5 shares declined throughout the week. 10 rising market ETFs outperformed EEM’s +1.64% acquire on a relative foundation, whereas 10 underperformed. Rising Markets ETF’s 5-day common absolute enhance was +1.40%, whereas EEM’s was +1.64%. The common absolute loss for the earlier week was -0.47%, whereas EEM had a de minimis acquire of +0.05.
In my final Rising Markets ETF research (revealed on January nineteenth), I steered {that a} retracement would happen within the close to time period, however not stunning given how far EEM has grown. This principle turned out to be untimely and EEM hit new highs, however per week in the past final Thursday, the chickens lastly got here again to roost. Final week, when it grew to become clear {that a} retracement was unfolding, I added new Schiff-correcting pitchforks (purple P1 to P3). The Rising Markets ETF Each day Momentum/Bread Oscillator failed to verify the excessive at P3 (dashed yellow line within the backside panel), giving us confidence {that a} backing and fill was about to unfold. Final Thursday, the decrease parallel line (stable purple line) offered some worth assist resulting in Friday’s rally. This rally slowed the decline in each the Stochastic Momentum Index and the Fisher Rework*, though each stay under the sign line. Simply monitoring Friday’s worth enhance by the newly drawn middle line of the Pitchfork (dotted purple line) means that the value decline could have run its course. The key phrase is “would possibly”.
*The Fisher Rework is a technical evaluation indicator used to establish the chance of worth reversals by reworking worth information right into a Gaussian regular distribution and was developed by John Ehlers.
