VWO, Vanguard MSCI Emerging Markets ETF

vwo

Emerging markets have done well the last few years. It used to be that this was an excellent place to put your money if you wanted to loose it, but that has changed drastically. The emerging markets have younger populations and have lots of growth to catch up on. This while the western world is increasingly getting over-weight  and is rapidly becoming senile. The growth is there and the problems are here, so to speak, but the stress level between the two keeps increasing as do the disparities.

As we all know from the Volcker era, it is simple impossible to control the money supply , interest rates and exchange rates (and unemployment, for that matter) at the same time within a single jurisdiction. National boundaries have essentially been erased by all manner of pegs and what have you, so that now the World, or practically 2/3 of it, forms one single monetary jurisdiction. Japan has pegged the Yen for more than 20 years to the dollar, the Chinese have been doing it for at least ten years, in some quarters does not accept anything but dollars, no roubels please. Essentially this is the same problem that Europe is trying to cope with, except that 2/3 of the world is even larger.

  EW has only 13 different patterns, some are easier to recognize than others. The horizontal triangle, contracting or expanding, is one of the clearest of the patterns. Also it has the advantage of telling  you where you are (at least within a single degree). It has to be either a B-wave or a 4th wave. This sort of “anchors” the analysis to a certainty. In this case a B-wave is almost a sure thing. The c-leg could then equal the a-leg, which would lead to the double –top level of about $60, but, as often as not, is only 62% of a and that is in the past. This is very much a similar situation as that of St. Jude Medical, except that few people own it whereas a lot of people own the emerging markets, thanks to what is nowadays referred to as an eclectic approach, freely translated to mean “go where you have never been before”.