Wow, what a difference a month makes! On the 20th of November we took a look at EEM and saw a stock trapped in a long-term regression channel, ready to continue to slave away in a small range defined by the top of that channel and its 200-day simple moving average. Boy, were we wrong. Almost immediately after we hit “send” the stock jumped up, and kept jumping up, completely ignoring the top of that channel and a bearish moving average crossover.
Now we’ve got to look at $45 as a long-term point of resistance, because that’s near the high for year (almost a year ago, incidentally) and it’s the only meaningful technical level we see here. There’s been some leveling-off happening in the last week, so that may be a sign that the run upward is over. If you’re still bullish on this emerging markets ETF, take heed – the end of the run, and least the short-term end – may be nigh.
We don’t see a really attractive trade here, but if we were forced to do something we’d be looking at selling an iron condor wrapped around the 40 and 45 strikes, or potentially just a call spread at 45 or 46. Beyond that there just isn’t a ton here.
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