Since 2007, Emerging markets (EEM) have under performed the broad market by nearly 80%. Below compares the performance of the S&P 500 to Emerging markets ETF EEM, since the highs back in 2007.
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Could this lagging performance be coming to an end? For this lagging performance to end, it first has to accomplish an important breakout, see chart below.
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EEM has created a series of lower highs along line (1) at (2). This line was last touched in 2014, where it peaked and soon lost over 25% of its value. EEM is kissing the underside of line (1) again at (3), as the month of May is coming to an end.
At this time, EEM is facing a critical test of resistance, as it is kissing the underside of more than one line at (3). Over the past few years, this is a price point where buyers stopped coming forward. If EEM can manage a breakout at (3), it would send a bullish message to this lagging ETF.
