Rich Ross at Auerbach Grayson is a highly decorated technician who has been nailing his calls lately. He now sees choppy sailing ahead for the emerging markets group.
As chief global strategist at Auerbach, Ross is currently focused on the MSCI Emerging Markets index, which is reflected in the performance of the grandfather of all emerging markets funds, EEM:
He sees the chart forming a head and shoulders pattern here that could take it down another 7% if it fails to hold key technical levels.
Translating Ross’s calculations into EEM prices, the first inflection point to watch is $45.39, which corresponds to 1,120 on the index.
If EEM closes below that point Friday, it will break 50-week support. At that point, Ross sees a fast move all the way down to $42.28.
He still likes Russia (RSX), South Korea (EWY) and Indonesia (IDX), but is counseling investors to lighten up everywhere else.
We recently went over some of these charts with him and think his view definitely merits a look.