Last week was the worst week for emerging market stocks since the start of the pandemic. What will happen next for emerging markets? Let’s see what the charts can tell us.
Check out the chart of the iShares MSCI Emerging Markets Index, symbol EEM. This ETF has broken its trend line, in black, and its 50 day moving average, in blue. EEM is holding on to a support level from July, represented by the purple line.
If that line breaks, EEM could shoot through the July gap to its next level of support, the 200 day moving average, in red. The current downward momentum favors such a move.
Why are emerging markets weak? According to Deutsche Bank, the U.S. election, just over a month away, is causing investors to move away from risk assets. This election will be like no other in