We are seeing some poor action in the emerging markets this week, with the EEM ETF giving up the progress it had made earlier this month. One component of the potential rotation into the global material/energy/industrial sectors is indeed seeing improvement in the emerging markets, given how closely tied those sectors are to the likes of Brazil, Russia, India, and China.
First, consider the weekly chart of the emerging markets ETF. Note how it appeared bulls were on the cusp of an imminent breakout. But then price gave it up and is starting to roll back over on heavy sell volume. Even if this does not mean a major bull trap at hand before we crater, it does indeed scream “more time!” to consolidate before the next attempt is made.
The second chart zooms in towards the daily timeframe, where the breakout attempt from the falling channel and subsequent rollover is all the more pronounced.
These are now emerging problems to watch after Memorial Day.
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