Long Term Forecast – Emerging Markets ETF (EEM)

This was the most difficult chart to analyze, by far. I worked on it several weeks, starting again and again until I came up with this version. In short, I believe EEM is still threading through the correction it started in 2007, following a double-zigzag pattern. You would ask how I arrived to this conclusion. The line of thought was very simple. The very first wave of the correction was motive and it means that in order to complete the correction, there must be another motive wave C down. If you look at the chart, there has been not a single major wave since 2008 that would qualify for an actionary wave or a diagonal down. After that, everything was even simpler. Many waves in this multi-year correction are motive which is typical for a zigzag. Wave (X) looks like a clear zigzag, the most common type of wave for waves X. 
Speaking of the last wave, there is a chance that this is only wave (a) of a bigger wave B. There is also a possibility for a direct motive wave C down. The last wave seems to reached exactly 2.0 fibs off the March low, could go a little bit higher, and then reverse.
Once reversed, it would be difficult to determine whether we are facing wave (b) or C down, possibly until they reach their ends. The reason – so many motive waves in zigzags in both directions. 
And the last thought that crossed my mind. There is absolutely no guarantee that this correction would end with a clear motive wave C down. What would prevent the stock from starting the third zigzag in the same correction, say for another 5-10 years? Optimism through the roof, eh? 

EEM – Long Term Forecast

Nevertheless, I tried to make a few brave predictions for the possible stock moves:
1. Possible targets for alt C (blue):
    – 0.786-1.0 of wave (X)-A: $29-33
    – 0.618-0.786 of wave 0-A: $23-29
    – timing – about a year or less
2. Possible targets for C (red) TBD once wave B complete, however, could be close to targets for alt C. Timing – 3 or more years.

%d bloggers like this: