What is a Text Book Bull Market?
It means prices move in a way it has been described in the textbook
Emerging market became big investment theme in 2017. But the seeds of the bullish move were planted way back in Feb 2016. Thanks to that, EEM managed a 70% move between 2016 and 2017
People who follow Price Action do not look to buy bottom. They buy trending moves
Here’s how the text book move started: A LARGE CANDLE MOVE IN FEB 2016
EEM Emerging market made a big candle move in Feb 2016 and then for a long time created a solid base at 31-32. A Large Candle move is always seen as Start of a new trend. This was the first buying Opportunity.
EEM rallied to 37.75 and then traded flat there. Reason: US Election. Textbook says: If you are fearful, take profits before a big event. This worked. Though there was lots of HOPE, the market got big jolt with Donald Trump Victory. There was massive sell-off and the Trend got disrupted [Fear of deglobalization]
You cannot stop an idea whose time has come. The TREND started again in February 2017 with BREAKOUT
The Global recovery trade theme started gaining momentum in January 2017 and EEM made a strong comeback. All it needed was a new breakout above 37.5 for disrupted trend to resume again
Emerging market EEM did just that in Feb 2017
The Most important chart to keep an eye on: MSCI EEM pic.twitter.com/RwjfwxudFx
— Deepak Singh (@smarket) February 6, 2017
EEM broke out above 37.75 in Feb 2017 – remember it was earlier the resistance.
Reading Price Action means getting positioned for the trade
MSCI EEM is on verge of breakout. If that happens, explosive buying might happen in index stocks as top down FII money might flow
— Deepak Singh (@smarket) February 6, 2017
The real game started post its breakout as anticipated.
As you can see in the chart above, EEM created a TECHNICAL BUYING Opportunity during pullback in March at $38.This was the SECOND buying Opportunity
EEM then made a clean bullish move which continued till January 2018 to it’s previous all time high
Emerging market scales a very important level…peak of 2011 pic.twitter.com/bld3VSSjsj
— Deepak Singh (@smarket) January 19, 2018
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers