timwest
Short

Emerging Markets Spyder EEM overbought here versus SPY

217 3 4
This is a chart of the EEM             versus SPY             . I divided SPY             by 100 so the resulting fraction would be 2-digit number.

The concept here is that overbought conditions tend to get more overbought signals in bull markets. And that overbought conditions tend to be good sell signals in bear markets.

So, if this is a bear market, then this is a good area to sell short EEM             and go Long SPY             for a few percent return in the next few weeks. The chart speaks volumes about where Emerging Markets are relative the S&P500             and it could very well be that EEM             is about to embark on a multi-year outperformance of the SPY             to the tune of 50%, which would drive this ratio from 22 up to 33.

I have enclosed my other charts that relate to this same idea and the forecast for the DIA             for 2014 from the turn of the year also.

Cheers.

Tim 11:51AM EST 5/12/2014
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2use
2 years ago
Nice observation! It did go to oversold recently - CCI dropped heavily, but the price is higher than the previous low. A good buy area?
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timwest PRO 2use
2 years ago
I'm surprised this hasn't received much attention - so thanks for noticing 2use. EEM has been very interesting to watch relative to the SPY. Feel free to make a chart and post it! I think it is a very worthy trading pair with plenty of volatility in the ratio.
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2use timwest
2 years ago
I lack time, otherwise i would look up all your charts. I have a file and i see that i actually looked at many of these charts before - i was invested in EEM countries actually and they made some good progress. Indeed, i was surprised the chart lacked attention. I do think that your chart is one of the best one to compare the pair - and shows how much one of the sides ran away from the other. I will be checking EEM charts this week and maybe see some that i can post - i follow your advice and do not spam this site and try to post ideas that i think are sure bets. (i am not trading some indices, but UK and DAX observations sure were worth the while)
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