This Emerging Market Could Deliver a +28% Gain
If global stock markets are turning bullish after last year’s lackluster performance, emerging markets could be the biggest gainers. In the most recent bull market, emerging markets gained an average of 176%, outperforming developed economies by almost double.
If history repeats itself, this could be the best way to profit…
#-ad_banner-#My 26-week ROC strategy is signaling MSCI South Africa (NYSE: EZA) could be the top performing emerging market ETF in the coming months.
Right now, EZA is trading near its long-term support level. But I think that’s about to change…
The weekly chart of EZA below includes the 26-week ROC at the bottom. The indicator became oversold in September and has since been in an uptrend. In the last week, the ROC broke above its 20-week moving average. This confirms that ROC is in an uptrend and is a bullish indicator pointing towards higher prices.
The price pattern is also bullish. Recent price action created a triangle pattern which allows us to calculate a price target. When the difference between the downward sloping line ($77.58) and the support line ($56.80) is added to where EZA broke out, we get a price target of $83.68 ($20.78 + $62.90 = $83.68).
That represents +28% upside potential from recent prices.
The chart also shows how to limit risk in this trade. Once broken, resistance generally becomes support and will often limit the down side in a trade. Resistance near $57 on EZA halted price advances in 2009. Once the price broke above that level, $57 became support. Prices have bounced off that price four times in the last 18 months. A close under $57 would show that support has failed and it’s time to exit the trade.
EZA is a great way to add international exposure to your portfolio. Emerging markets tend to move the fastest in bull markets. The chart shows a bullish pattern and the potential reward is more than twice as high as the risk.