The Market's Compass Emerging Markets Country ETF Study

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That is the primary publication of the Market’s Compass Rising Markets ETF Examine to be printed in our Substack Weblog that may spotlight the technical adjustments of the 22 EM ETFs that we monitor on a weekly foundation. Please notice, as a result of earlier commitments of the creator this research is being printed in the present day however was compiled Monday and all knowledge is of final Friday, February 18th. Previous publications will be accessed through The Market’s Compass web site or by contacting us immediately.

Final Week’s and eight Week Trailing Technical Rankings of Particular person ETFs

The Excel spreadsheet beneath signifies the weekly change within the Technical Rating (“TR”) of every particular person ETF. The technical rating or scoring system is a wholly quantitative method that makes use of a number of technical issues that embody however will not be restricted to pattern, momentum, measurements of accumulation/distribution and relative energy. If a person ETFs technical situation improves the Technical Rating (“TR”) rises and conversely if the technical situation continues to deteriorate the “TR” falls. The “TR” of every particular person ETF ranges from 0 to 50. The first take away from this unfold sheet needs to be the pattern of the person “TRs” both the continued enchancment or deterioration, in addition to a change in course. Secondarily a really low rating can sign an oversold situation and conversely a continued very excessive quantity will be seen as an overbought situation however with due warning over offered situations can proceed at apace and overbought securities which have exhibited extraordinary momentum can simply change into extra overbought. A sustained pattern change must unfold within the “TR” for it to be actionable.

As will be seen above, of the three Rising Market Nation areas we monitor, solely the 5 Latin America Nation ETFs have sported Technical Rankings (“TRs”) which have been above the “purple zone” (above 15) for the previous six weeks. The chart beneath is of the iShares Latin America 40 ETF (ILF) which broke out of a six-month downtrend in January clearly delineated by the purple dashed channel) in live performance with a flip in MACD which has been monitoring larger in optimistic territory. The highest 15 holdings within the ILF ETF (panel following worth chart) are closely weighted with Brazilian equities and in flip the iShares MSCI Brazil Index Fund ETF has a really comparable worth sample.

The EEM with This Week’s Whole ETF Rating “TER” Overlayed

The Whole ETF Rating (“TER”) Indicator is a complete of all 22 ETF rankings and will be checked out as a affirmation/divergence indicator in addition to an overbought oversold indicator. As a affirmation/divergence software: If the broader market as measured by the iShares MSCI Rising Markets Index ETF (EEM) continues to rally with no commensurate transfer or larger transfer within the “TER” the continued rally within the EEM Index turns into more and more in jeopardy. Conversely, if the EEM continues to print decrease lows and there may be little change or a constructing enchancment within the “TER” a optimistic divergence is registered. That is, in a vogue, is sort of a conventional A/D Line. As an overbought/oversold indicator: The nearer the “TER” will get to the 1100 degree (all 22 ETFs having a “TR” of fifty) “issues can’t get significantly better technically” and a rising quantity particular person ETFs have change into “stretched” the extra of an opportunity of a pullback within the EEM. On the flip aspect the nearer to an excessive low “issues can’t get a lot worse technically” and a rising variety of ETFs are “washed out technically” an oversold rally or measurable low is near be in place. The 13-week exponential shifting common in Crimson smooths the unstable “TR” readings and analytically is a greater indicator of pattern.

The EEM Whole Technical Rating (“TER”) of the 22 Rising Market Nation ETFs rose to 680 from 607, leading to a +12.03% improve week over week. Strikes of this caliber are extra the norm than they’re outliers. We remind readers that as a result of a good quantity EM ETFs are thinly traded and are topic to broad swings which in flip creates unstable particular person Technical Rating adjustments, that the calculation of the TER additionally fluctuates in the same manor. Analytically, specializing in the 13-week shifting common of the TER is a much better indicator. That shifting common has not made a brand new low, and as will be seen on the chart above, there was a sequence of upper lows within the TER because the July of final yr (yellow dashed strains) because the EEM has continued to commerce decrease from the February 16, 2021, excessive. TER divergences take time to develop, and provided that we start to see worth get away of the down pattern or the TER decisively get away of the contracting triangle to larger highs would we be ready to counsel that the EEM could also be out of the woods.

The Common “TR” Rating of the 22 EM ETFs

The Common Weekly Technical Rating (“ATR”) is the typical Technical Rating (“TR”) of the 22 Rising Markets Nation ETFs we monitor weekly and is plotted within the decrease panel on the weekly candle chart of the iShares MSCI Rising Markets Index ETF (EEM) introduced beneath. Just like the “TER”, it’s a affirmation/divergence or overbought/oversold indicator.

The Common Technical Rating (“ATR”) of the 22 Rising Markets Nation ETFs rose barely final week however the pattern, as will be seen by the longer-term shifting common (blue line) stays flat in a sideways churn though the shorter-term shifting common (purple line) is starting to trace at a flip. The EEM has been in a grinding downtrend since February of final yr and broke Cloud assist in December and has remained trapped underneath it and the Kijun plot (inexperienced line) since then. That mentioned the “ATR” has prevented printing a decrease low as costs look like stabilizing. It will be technically untimely to counsel {that a} flip in pattern has begun to unfold however it’s all the time prudent to concentrate to potential technical “whispers”.

The Week Over Week Change in Technical Rankings

The beforehand talked about iShares MSCI Brazil Index Fund ETF (EWZ) registered the most effective acquire in “TR” over the week (rising 11 to 38 from 27), adopted by the iShares MSCI Philippines ETF (rising 11 to37 from 26) and the iShares Malaysia Index Fund ETF (rising 10.5 to 39.5 from 29). Information is courtesy of Optuma

The Rising Markets Nation ETFs Weekly Absolute and Relative Worth % Change*

*Doesn’t together with dividends and costs adjustments are from February 14th to 18th

Twelve of the 22 Rising Markets Nation ETFs we monitor improved on an absolute foundation final week, led by the iShares MSCI Thailand ETF (THD) up +2.69%. The THD additionally registering the most effective weekly “TR” at 48 (chart beneath), adopted by the iShares MSCI Philippines ETF (EPHE) up +2.19%. Twelve EM ETFs outperformed the iShares MSCI Rising Markets ETF (EEM) which, though not unprecedented, was unchanged on the week as was the iShares MSCI UAE Capped ETF (UAE). On a relative foundation 9 EM ETFs underperformed.