Friday, March 30, 2007

EEM Stronger Than The S&P



Recently I've been buying stocks and groups that have been showing relative strength and shorting stocks that have been showing relative weakness and it's been working well.

We can apply that same approach to indices and ETFs as well. If you are looking to buy an index or ETF, EEM should be on your list. Notice in the above chart how EEM has tested its 50 day moving average and appears to be headed back up. The S&P for example is below its 50 day moving average.

The lower pane contains a ratio line of EEM vs the S&P. Notice how the ratio line has broken out to a new all time high before price has. This is a good indication of just how much stronger EEM is relative to the S&P. So if you are looking for the overall market to go back up, EEM should be at the top of your list of ETFs to buy.

2 comments:

Yaser Anwar said...

Kevin-

There was a sentimentrader.com chart I saw which revealed a way to time EEM trades. Each time the P/B value of EEM hit 2, it was overbought and each time it hit 1, it was oversold.

Overlaying the chart of EEM showed the ups and downs, fascinating (hmm have I told you this beforE? oh well).

Kevin said...

Yes you have told me this before...Send me the chart if you can Yaser...Thanks

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