Eurodollars & emerging markets to rip higher?

Mentioned products: ED, SPX, EEM, EWZ, EXY,

This weekly overview I’d like to dedicate to Eurodollar bond futures and emerging markets. Few weeks ago I wrote that bonds could move higher (the opposite is true for rates); at that time I wrote about TLT ETF which is probably one of the most general bond products. 

Let me go straight to the price chart of 3-month Eurodollar Dec18. The contract just closed weekly trading at an important trendline and 200d MA.ed

It is important to note that hedge funds have built a massive short position in ED. So if the price starts breaking above the trendline and hedge fund positioning starts to unwind, we could see an aggressive move higher. Let me show ED positioning on the chart below.ed_positioning

There still aren’t many too exciting things happening in SPX. Last two weeks were exceptionally quiet with low volatility. We are still in an up trend and usually such a low volatile trading range happens in a consolidation before a break higher. There is a massive resistance at 2400 in SPX because many people might be selling and looking for a double top formation. I would still rather lean towards a break higher though.. important level for bulls to defend is 2328.

But even if SPX or other US indices are not too exciting, this doesn’t mean other markets are not exciting. I wrote about European markets last week.. And iShares MSCI Brazil Capped EWZ was very strong last week which is suggesting further gains are to be expected. ewz

I tweeted about this potential break out of a corrective wedge on the 1st of May, so please follow me or #ChartingTrades to not to miss more up to date opportunities.

Also iShares MSCI South Korea Capped EWY is breaking above a multi year-long trendline resistance. If bulls can hold above the tendline would be very constructive!ewy

And let me finish this week with China A50 index. In the last few weeks it looked ugly and seemed we might roll lower, but price action in the last couple of days was very strong and negated a potential selloff for now. We closed above the previous high and both trendline resistances… xinhua

I would say these developments are not bearish and are just confirming generally bullish trends worldwide!

If you like this post please subscribe to my blog here.

#ChartingTrades

Terms of use.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s