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First off, I view the entire monetary and financial system as something of a Ponzi scheme. Starting with currency that is debt, and running straight though a global economic model that is based on a premise of infinite growth in a finite world. This won't end well. I'd go a step further and... More
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  • CH ahead of itself? 0 comments
    Mar 25, 2011 2:24 PM | about stocks: CH, ECH

    If one is a short term trader interested strictly in capital gains, it would appear that CH (Aberdeen Chile CEF) is well ahead of itself as compared to ECH (iShares Chile).  Aberdeen reports that as of 3/23, CH was trading at a premium of almost 15%.  Even considering its 8%+ yield and an ex-div date less than a week from now (3/29), the premium seems pretty excessive.

    CH is also coming back up on the underside of its rising trendline from 2009.

    Between the 15% premium and the possible trendline resistance, it seems like a decent time to harvest the sizeable CH gain from the last month.

    Longer term, things look pretty sunny for the Chilean market.  An upcoming dip could be a nice buying opportunity.  The 50 day EMA has just risen back above the 200 day EMA (10% below the current price).  A number of "emerging" markets have recently broken to the upside of falling resistance trendlines.  ECH - which I view as a more natural view of where CH should be - has done so as well, breaking to upside of its falling channel:

    It seems reasonable to expect to CH to consolidate and give back some of its outsized gains relative to ECH in the next two weeks.  For a short term trader, this would seem like a good time to lock in profits on CH.  For a longer term investor looking for yield and emerging market exposure, the next few weeks may present a decent buying opportunity.

    disclosure: I will be selling some swing shares of CH, while retaining core holdings of CH.
    Stocks: CH, ECH
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