Buy Signal Intact

by Paul Goodwin on November 26, 2014

This is an excerpt from Cabot China & Emerging Markets Report, which seeks to capitalize on the big boom in China and other emerging market countries. Editor Paul Goodwin, Cabot’s international investing guru, provides your passport to profits.


The PowerShares Golden Dragon Halter USX China ETF (PGJ) is sitting atop both its 25- and 50-day moving averages, telling us that the medium-term momentum of the market is up and giving us a buy signal from the Cabot Emerging Markets Timer.

This is good news, considering that PGJ was dragged from 34 to 27 in the September/October correction. The recovery that started on October 15 ran back up to 31.5 by the beginning of November, but stalled there. PGJ staged a two-day correction on November 19 and 20, but popped right back to its 31.5 resistance. The only other news about the Golden Dragon is that its 25-day moving average crossed back above its 50- and 200-day moving averages on November 19. We haven’t found such crosses to be powerful indicators of strength, but there it is.

Developed market indexes continue to kite higher on light volume ahead of the long Thanksgiving weekend. As of mid-day on Wednesday, U.S. markets were being led by the growth indexes, with the Dow trailing. At 1:00, the Dow was down 14 points (0.08%), the S&P 500 was up 2 point (0.11%) and the Nasdaq had tacked on 18 points (0.37%). The PowerShares Golden Dragon Halter USX China ETF (PGJ) was virtually flat at 31.16, a loss of 0.02 points (0.06%).

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