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Matthew Crews
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Matthew Crews, CFA is a registered representative of Smith Patrick Financial Advisors, LLC, a fee-only advisor in Saint Louis. Matthew's focus is on building durable portfolios for clients using a wide range of ETFs for diversification. Given that clients portfolio's don't exist in a vacuum, Mr.... More
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  • Symmetrical Triangles Redux 0 comments
    Aug 15, 2012 10:47 AM | about stocks: EEM, EFA

    Here is another long-term look at the competing trends that are taking place in the global equity markets. Kimble Charting Solutions shows the triangles in both the developed international equity market (NYSEARCA:EFA) and the emerging market equity market (NYSEARCA:EEM).

    I continue to see downside risk here as the intermediate trend is downward from the 2011 peak. Early 2012 was above the 10-month trend for these two ETFs but the May swoon broke the trend. Currently EFA and EEM are both slightly above their respective 10MMAs.

    The challenge that I see is that if the intermediate downward trend remains the dominant trend then the above 10MMA trend will likely not persist. The biggest whipsaw however has been International REITs (NYSEARCA:RWX) which only briefly broke its 10MMA in late May/early June only to rebound strongly and break the intermediate downward trend.

    (click to enlarge)

    Lastly, match the price trends with fundamental data in Europe and China coming in weak and I have a difficult time seeing upside. (Note however that valuations themselves are likely improving for future positive returns once these economies recover.) Therefore I am tending to weight caution above optimism at the junction.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in EEM, EFA over the next 72 hours.

    Stocks: EEM, EFA
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