Latin America turning the corner? 4/17/13 UPDATE

UPDATE 4/17/13 --- the major rising support line is in danger of being breached.  That would nullify this idea.  

The ILF:SPY RS is still diverging.  Does this mean downside catch-up for SPY?? 


The emerging market group has really under-performed the U.S. markets so far in 2013.  Finally, we've found evidence that this is trying to change via ILF.  ILF is our go to Latin America ETF.  

Late last year, ILF broke higher out of a nearly two year wedge.  You can see there hasn't been much action since.  The high RSI level makes me believe this is a market just waiting to advance.  Last Friday, the ETF actually re-tested and bounced off its 20 month rising support line.  This is common in wedge breakouts that stall out.      

All in all, this is a good area to take a shot long, versus last week's low.    Note the relative strength is still in a downtrend.  Let's look at this further.  

  

These last couple of lows have really built up a strong bullish divergence.  The lagging period is about to be over, at least in the short term.  

I like an ILF pairs trade with SPY if/when the relative strength resistance line breaks.  I do like ILF as an investment entry, but if we confirm a breakdown out of the rising support line, you have to bail.