Welcome to The Market’s Compass Rising Market’s Nation ETF Examine, Week #591. As at all times, it highlights the technical adjustments of the 20 EM Nation ETFs that I observe on a weekly foundation and publish each third week. Paid subscribers will obtain this week’s unabridged Rising Market’s Nation ETF Examine despatched to their registered e-mail. Previous publications might be accessed by paid subscribers by way of The Market’s Compass Substack Weblog. Subsequent week I will likely be publishing The Market’s Compass Developed Markets Nation ETF Examine. On Sunday I revealed the most recent version of The Market’s Compass Crypto Candy Sixteen Examine which I publish on a weekly foundation and tracks the technical adjustments of sixteen of the bigger capitalized Cryptocurrencies.
To grasp the methodology utilized in establishing the target EM Nation ETF Particular person Technical Rankings go to the mc’s technical indicators web page at www.themarketscompass.com and choose “em nation etfs”. What follows is a Cliff Notes model* of the total rationalization of the methodology I take advantage of…
*The technical rating system is a quantitative strategy that makes use of a number of technical concerns that embody however will not be restricted to pattern, momentum, measurements of accumulation/distribution and relative energy of every particular person 20 EM Nation ETFs that may vary between 0 and 50. The Whole EM Technical Rating or “TEMTR” is the sum of the twenty particular person TRs and might be considered as an overbought / oversold indicator in addition to a affirmation / non-confirmation indicator. There may be additionally a Whole Rating for every geographic area that may be considered as a relative measurement on every week over week foundation.
This previous week The Whole EM Technical Rating or “TEMTR” rose 30.13% to 637 including to the earlier week’s 29.50% achieve to 489.5 from 378 three weeks in the past. The Whole EMEA Rating rose the many of the three geographic areas final week, +46.0% to 182.5 from 125 two weeks in the past when it rose 59.2% from the week ending 3/27 when it reached its nadir at 78.5. Final week the Whole Asia-Pacific Rating rose 33.2% to 251 from 188.5 the week earlier than. The Whole Lat AM Rating rose 15.6% to 203.5 from 176 the earlier week.
All twenty EM Nation ETFs I observe in these pages registered positive factors of their Technical Rankings or TRs over the previous week reflecting the broad-based enchancment within the technical situation of the EM ETFs. Final week 9 of the TRs have been within the “inexperienced zone” (TRs between 34.5 and 50), 9 have been within the “blue zone” (TRs between 15.5 and 34), and two have been within the “purple zone” (TRs between 0 and 15). The earlier week solely 4 TRs have been within the “inexperienced zone”, 9 have been within the “blue zone”, and 7 have been within the “purple zone”. Not at present or since February 28, 2025, has there been a Lat AM ETF Technical Rating within the “purple zone”.
*To grasp the development the of The Technical Situation Components go to the Market’s Compass web site www.themarketscompass.com and go to the mc’s technical indicators web page and choose “em nation etfs”.
A brief model of the how the Technical Situation Components are calculated follows…
There are eight Technical Situation Components (“TCFs”) which might be a summation of the twenty ETFs TRs technical situation of every TCF query. The eight Technical Situation Components don’t ask the identical variety of questions. That’s the reason it’s calculated as a proportion. If a TCF particular person studying is 100% that might imply that every one Twenty ETFs fullfilled that specific TCF criterior.
This previous week a studying an overbought 96.43% was registered within the Each day Momentum Technical Situation Issue (”DMTCF”) or 135 out of a potential complete of 140 optimistic factors.
As a affirmation software, if all eight TCFs enhance on a week-over-week foundation, extra of the 20 ETFs are enhancing internally on a technical foundation, confirming a broader market transfer larger (consider an advance/decline calculation). Conversely if all eight TCFs fall on a week-over-week foundation it confirms a broader market transfer decrease.
Final week, seven TCFs rose, and one was unchanged confirming the broader EM market transfer larger however the “DMTCF” counsel a stretched technical situation.
The Relative Rotation Graph, generally known as RRGs have been developed in 2004-2005 by Julius de Kempenaer. These charts are a novel visualization software for relative energy evaluation. Chartists can use RRGs to investigate the relative energy developments of a number of securities in opposition to a typical benchmark, (on this case the EEM) and in opposition to one another over any given time interval (within the case beneath, day by day) over the previous three weeks. The facility of RRG is its capability to plot relative efficiency on one graph and present true rotation. All RRGs charts use 4 quadrants to outline the 4 phases of a relative pattern. The Optuma RRG charts makes use of, From Main (in inexperienced) to Weakening (in yellow) to Lagging (in pink) to Enhancing (in blue) and again to Main (in inexperienced). True rotations might be seen as securities transfer from one quadrant to the opposite over time. That is solely a short rationalization of how you can interpret RRG charts. To be taught extra, see the submit scripts and hyperlinks on the finish of this Weblog.
Not all 20 ETFs are plotted on this RRG Chart. I’ve completed this for readability functions. These which I consider are of upper technical curiosity stay.
Regardless of the lack of Relative Power Momentum final week, the World X MSCI Columbia ETF (COLO) nonetheless retains its “better of the 20” pole place on a Relative Power foundation at 104.16 (see the Tabulation Desk beneath). Over the previous three weeks the iShares MSCI Malaysia Index Fund ETF (EWM) has clocked a 3 Quadrant transfer by falling out of the Main Quadrant, by the Weakening Quadrant and ending final week getting into the Lagging Quadrant exhibiting falling Relative Power Momentum (see the Tabulation Desk beneath). In a noteworthy restoration, the iShares MSCI Brazil Index Fund ETF (EWZ) has displayed a powerful rebound by rising out of the Lagging Quadrant and into the Enhancing Quadrant and is just one good day away from getting into the Main Quadrant.
The “Tabulation Desk” beneath marks the Relative Power and Relative Power Momentum readings vs. the iShares MSCI Rising Markets Index ETF or EEM. It begins with the readings on the finish of final week adopted by the trailing three weeks that features the readings from the final Examine for the week ending 1/16. If there was an enchancment in both the Relative Power Ratio or the Relative Power Momentum studying on a week-over-week foundation I’ve highlighted it in inexperienced. If there was a contraction in both, it’s highlighted in purple and an unchanged studying in both will stay black. The colour-coding system serves as a warmth map over the previous 4 Friday’s readings highlighting both the continued enchancment, deterioration, or stasis vs. the benchmark, the EEM. The ETFs which might be displayed on the RRG chart above are highlighted in blue.
*The “TEMTR” is the sum of the 20 Particular person Goal EM ETF Technical Rankings. It serves as an overbought or oversold in addition to a affirmation / non-confirmation indicator.
Final Wednesday’s sharp rally was seemingly fueled partly by quick masking and a dramatic reversal within the USD, however it could be folly to argue with the impulsive nature of the decisive value transfer. The “TEMTR” rose in live performance with value because it blasted again above the 13-Week Exponential Transferring Common. For sure, the prospect of peace within the Center East is tenuous at greatest and I might anticipate that the value hole (proven within the Each day chart that follows) will seemingly be crammed because the iShares MSCI Rising Markets ETF (EEM) retraces the rally.
*The “ATR” just like the “TEMTR” serves as an overbought or oversold in addition to a affirmation / non-confirmation indicator.
The Decrease Warning Line (gold LWL) of the Schiff Modified Pitchfork (gold P1-P3) grew to become assist to additional promoting within the EEM and final week the ETF retook the bottom above the damaged Decrease Parallel (strong gold line) and each the Kijun (inexperienced line) and Tekan (purple line) Plots. The Common Technical Rating (violet line underneath the value panel) turned abruptly larger with the +7.0% rally final week and has edged its approach by each shifting averages. The shorter-term 8-Week Stochastic Momentum Index (heart panel) had change into oversold and has turned again by its sign line. I’m now marking key assist on the P3 pivot low at 52.50.
Find out about Pitchforks and their software within the three-part Pitchfork tutorial on the Market’s Compass web site, www.themarketscompass.com
Extra on the technical situation of the EEM in Ideas on the Brief-Time period Technical Situation of the EEM however first…
*Doesn’t embody dividends if any.
All twenty EM Nation ETFs have been up on an absolute foundation final week. 5 of the EM ETFs outperformed the +7.2% achieve within the EEM on a relative foundation and fifteen underperformed. The common five-day absolute achieve within the Rising Markets ETFs was +5.52%, including to the +3.41% achieve the earlier week.
The EEM rallied again into the Cloud final Wednesday and as of final Friday the EM ETF remained within the confines of the Cloud. The 8-Day Momentum Stochastic Index (heart panel) bounced from oversold territory to an overbought studying on the finish of the week. MACD turned larger as effectively, overtaking its sign line and is again in optimistic territory. The EM Nation ETF Each day Momentum / Breadth Oscillator turned at a better low when costs fell to new lows (vertical dashed line) giving a strong indication that draw back value momentum had reached an excessive in live performance with breadth enhancing, however the Oscillator has change into stretched as effectively. Costs will seemingly check Cloud assist and value and the Kijun Plot assist on the 57.71 stage prior to later.
All of the charts are courtesy of Optuma whose charting software program allows anybody to visualise any information together with my Goal Technical Rankings. The next hyperlinks are an introduction and an in-depth tutorial on RRG Charts…
https://www.optuma.com/movies/introduction-to-rrg/
https://www.optuma.com/movies/optuma-webinar-2-rrgs/
To obtain a 30-day trial of Optuma charting software program go to…
