BUY this instead

I sound very bearish at the moment as I have just "talked down" the US market, arguing for a severe correction potentially in the magnitude of 200+ points for S&P. So you may think I must be bearish for everything about stocks, right? Wrong! Actually I think there is a good place to put for your money if you are itching to buy stocks now. See the chart below.


It is the emerging market (EEM) I’m talking about. It may sound risky for emerging market stocks but I think it is in a much better and safer position than the US stocks. First of all, it is much cheaper than the US market for sure. The P/E for Emerging Markets is only 10.5 vs US 14.6. While it was a brutal year for EM last year due to strong US$ and ongoing trade issues etc, all the major risks have already been priced in I think. That’s why it is so cheap after it has plunged nearly 30% last year. But what makes me more interesting is its TA. As you can see, it has clearly broken out through its downward trend line. This is a bullish move technically speaking and more importantly it is supported by its bullish momentum on its daily or weekly chart. We saw a similar setup last time two years ago when EEM plunged nearly 40% and bottomed in Jan 2016. Two years later, it shot up 84%, topped in Jan 2018. I think we may see a similar scale of uptrend for EEM. As I said, it is a lot easier to buy lows when no one is interested in it. Of course, it is still a risky speculation and you better have a clear exist strategy with a stop loss in place. More importantly, it won’t be a straight line up. Do expect some volatility! I personally have been playing with the Brazil market via EWZ for a while. It could be more risky but so far so good!