Are the waters safe?

A couple weeks ago I made reference to my fuzzy trending system I use to trade ETFs. At the time, it was holding mostly commodities (USO and GLD). However, after the recent encouragement the market received from the bearded one, it has begun to trigger entries in equities again. In the last two days, it’s had entries for EWD (Sweden), EWN (Netherlands), EWO (Austria), EWY (South Korea), EWG (Germany), EWL (Switzerland), EWS (Singapore), EWU (UK) and EWZ (Brazil). Obviously there is a theme here, most of the European markets are breaking out and are benefiting from the weakening of the Dollar vs the Euro. We’re also beginning to see strength return in some of the emerging markets (Singapore, South Korea and Brazil).

Here’s an example of what most of these charts look like on a weekly basis:

EWN (Netherlands)

Does this mean the “correction” is over and everythings off to the races again? I have no idea. For all I know this is just a small countertrend rally and next month we crash through the lows and see the emerging markets down 25%+. However, my system I use for ETFs is a traditional trendfollowing model and its job is to make sure it’s in any market that looks to be trending long. My job is to actually execute the trades to buy these markets. Both of us are currently doing our job.

- John