#$idx

[jlfmi]

Is This Country Poised To Be The Next Big Global Breakout?

Among a sudden glut of attractive looking global equity markets, today’s Mystery Chart Of The Day stands out based on its potentially bullish pattern.

One emerging theme (no pun intended) in global equity markets is the brightening technical outlook among many international indices. Whether that means improving short-term prospects, e.g., Southern Europe and China, or potentially substantial long-term opportunities, e.g., Northern Europe and emerging Asia, the technical backdrop across international equity markets has not looked this attractive in a long, long time. Today’s Chart Of The Day is but one example of this theme.

We are presenting it here as a Mystery Chart, i.e., sans label/ticker, etc., for a few reasons. First, Mystery Charts are fun! We put it out on Twitter and StockTwits to let followers take a shot at guessing the index. Secondly, we have to let our members at The Lyons Share have the first crack at the idea. Lastly, removing the name/ticker allows one to view the chart without any pre-conceived biases, good or bad.

That said, the mark-ups we’ve included on the chart obviously add some bias in their own right as they interject our (potential) interpretation of the chart. In this case that interpretation is a possible “cup-&-handle” pattern, a potentially very bullish pattern that we have discussed many times, including this recent post on the Indian stock market. Will the bullish implications come to pass with the Mystery Chart? It remains to be seen. In the meantime, see if you can guess what it is.

Want to know what the Mystery Chart is? Find out at The Lyons Share.

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Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.

[jlfmi]

Wait ‘Til Next Year For These Cubs?

As a lifelong Chicago Cubs fan, there is one unfortunate phrase that I had to learn early on: “wait ‘til next year”. No matter how promising a season may have started for the team, every year since their last World Series title in 1908 has ended in sorrow (1984 in particular, for me). A similar story has unfolded this year for a different kind of “Cub”.

We posted several pieces early in the year on the various emerging markets known as the Asian “Tiger Cubs”. These markets -- Indonesia, Malaysia, the Philippines and Thailand -- began the year in promising fashion. While Malaysia was the laggard of the group, Indonesia and the Philippines experienced nice looking breakouts while Thailand appeared poised to do the same. We even suggested that they looked to be in the running early on for “stock market of the year”. Well, as any Cubs fan can tell you, a lot can happen between April and October -- or August.

In viewing the Asian Tiger Cubs collectively, we constructed an equal-weight composite of the 4 markets.

Similar to its components, the Composite started the year out strongly. In late January, the Composite broke above its previous high closing levels from 2013 and 2014 and into all-time high territory. While the breakout looked promising, it did not stick. After reaching its peak in early April, the Composite failed to hold above the previous highs. Recently, it has accelerated its move to the downside. As of today, the Composite is down about 15% from its April highs and sitting at an 18-month low.

We will note 2 potential positives. First, there is no indication that the secular bull markets that these countries have been in for the past decade has run its course yet. However, that is a longer-term positive -- like saying your team’s farm system is loaded with talent. Secondly, several of the markets are reaching or will soon reach important support levels. We would expect these levels to support at least a bounce in the indices. However, that is only a short-term positive -- like when your team goes on an 8-game winning streak after they’ve already been eliminated.

In the intermediate-term, however, we don’t have much reason to bet on these markets. While things looked promising early in the year, following the failed breakouts, any “market of the year” awards will likely have to wait ‘til next year for the Asian Tiger Cubs.

Even the Chicago Cubs stand a better chance this year...

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More from Dana Lyons, JLFMI and My401kPro.

The commentary included in this blog is provided for informational purposes only. It does not constitute a recommendation to invest in any specific investment product or service. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.

[jlfmi]

Is Indonesia The Next Tiger Cub To Break Out?

The "Asian Tigers" moniker, as many investors may be aware, refers to the economies of Hong Kong, Singapore, South Korea and Taiwan. Lesser known perhaps are the "Tiger Cubs". These are less-developed, but presumably wanna-be "Tigers" and consist of Indonesia, Malaysia, the Philippines and Thailand. We highlighted the rcent breakout and potential upside of the Philippines' market last Friday. Today, we spotlight another Tiger Cub that may be hot on the heels of the Philippines: Indonesia.

Like the Philippines, Indonesia bottomed in 2002-2003 and has been in a secular bull market since. After forming a low in 2008, the Indonesia Jakarta Composite rallied into May 2013, topping around the 5200 level. After retreating from that area for the balance of 2013, the index tested those highs in September 2014 and again at the beginning of this year, forming a variant cup-&-handle. As we mentioned in the Philippines post, this action serves to chip away at former resistance before presumably breaking out to new highs. Whether or not it does indeed break out is the question. We'll also repeat our oft-issued warning on recent "breakouts" since false breakouts have been as commonplace as successful breakouts.

Should the Indonesia Jakarta Composite eventually break out, initial further upside, based on the following confluence of Fibonacci analysis, could be in the range of 20-30% to the 6200-6800 levels:

161.8% Fibonacci Projection of 2002-2008 Rally ~6800

23.6% Fibonacci Projection of 2008-2013 Rally ~6200

38.2% Fibonacci Projection of 2008-2013 Rally ~6800

161.8% Fibonacci Extension of 2013 Decline ~6100

200% Extension of 2013 Decline ~6700

We do not like to anticipate breakouts. Therefore, we will keep a close eye on Indonesia in coming days and weeks as to see if it can follow fellow Tiger Cub, the Philippines, into all-time high ground. If it is successful, it too could be in the mix for a potential 2015 stock market of the year run.

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More from Dana Lyons, JLFMI and My401kPro.