While money has flowed out of BRIC ETFs (Brazil, Russia, India, China), Southeast Asia continues to be a hot spot with bullish chart patterns in Indonesia ($EIDO), Thailand ($THD), and Singapore ($EWS). When we first alerted you to these bullish patterns in our April 10 blog post, most of the chart patterns were not yet actionable. But now, at least two of them may be within the next few days.
The iShares MSCI Thailand Index ($THD) has formed a bullish basing pattern during the past five weeks, and has found support around the 10-week moving average, which is a bullish sign. On the weekly chart below, note the strong uptrend that has been in place:
After three shakeouts below the 50-day moving average (on 3/22, 4/5, and 4/15), $THD has reclaimed the 50-day MA and is poised to break out above the short-term downtrend line of the consolidation. This is shown on the daily chart interval below:
Another Southeast Asian ETF looking great is iShares MSCI Indonesia Fund ($EIDO), which has formed a tight-ranged base while holding the rising 10-week moving average (roughly the same as the 50-day moving average on the daily chart), indicating that the price action is very tight.
We also see that the current base has formed just below the prior high of 2011, so a breakout above the current range should propel the action to new highs, with no overhead resistance. Check out the weekly chart pattern:
Drilling down to the daily chart (below), we see $EIDO potentially forming “higher lows” within the base, which is a sign of constructive price action.
Further, this is the first pullback to the 50-day moving average since the base breakout in February. The first retracement to kiss the 50-day MA is typically where institutions step in to support price action of stocks and ETFs in a strong uptrend:
Both of the above ETFs we analyzed ($EIDO and $THD) are “official” setups for potential swing trade buy entry in today’s Wagner Daily swing trading newsletter. To receive immediate access to our precision trigger prices for buy entry, exact stop prices, and target prices for both $EIDO and $THD, sign up now for your risk-free trial membership at: https://www.morpheustrading.com/services/swing-trading-newsletter. Subscription cost is less than $2 per day (based on annual rate) and can be canceled any time.
The market has been amazingly resilient since late February. The key to this rally is the action in leading stocks, which generally appear to be holding up well. To name a few, $LNKD, $AMZN, $TSLA, $EBAY, $AMBA, $CELG, and $PRLB are either holding steady or finding support at logical levels. Homebuilders and transportation stocks have not impressed lately, but they continue to base out and that is a good sign (check out the $ITB and $IYR ETFs). If top stocks continue to hold while new breakouts emerge, the broad based averages will follow suit.
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