It’s hard to ignore the media coverage on global markets these days – I find myself avoiding CNBC during market hours more and more just to keep my focus where it needs to be. Across all major news sources we’ve heard a lot in the last year, the Dubai Debt Crisis, European Debt Debacle (P.I.I.G.S), fear of a U.S. double dip and more, but many investors missed the stealth success of an emerging BRIC (Brazil, Russia, India, China) country. Despite tepid performance across the BRIC countries in recent months India has persistently remained strong over the last 24 months and just this week hit 31 month highs.
Let’s delve into this surprising trend and determine if you should be chasing or fading this emerging powerhouse. I like to look at India based on three different time frames using three different technical based systems – this is the strategy that I use in the ETFTRADR portfolios each day. I call it a 3X3 strategy where I constantly monitor three time frames and three time-frame-unique systems, which provides diversity on indicators and periods. If you are interested in learning more about strategies we use I recommend joining Freemium TRADR, it's the easieast way to become a rockstar ETF TRADR. We’ll use the Wisdom Tree India ETF (EPI) since it has far better liquidity than other India ETFs (INP, IFN). In the last two years EPI has gained more than 20% outpacing the BRIC Index (BKF) and the S&P500 (SPY) significantly.
Let’s start with the bird’s eye view and weekly charts. The INVESTR system, which uses William’s % R, moving averages and Parabolics, has been extremely effective in 2010. The trend based system does show extreme strength, however, is it too strong to chase now? In my view, it’s not a good time to enter based on weekly charts – traders do not want to fight the current on EPI, but rather look for lower risk entries. Take a look at the chart below; I’ve highlighted several different entry points based on this type of bull retest. I look at 80 or 50 level retest to provide advantageous entry prices. The key is marking the retest bar’s low as your stop. To continue reading, click HERE.
By Andrew Hart – ETFTRADR