[Chart Of The Week] The Most Bullish Chart In The World

JC Parets
July 18, 2016

Since late March and early April, most of the major stock market indexes around the world, U.S. included, consolidated in a sideways range. The dilemma/argument among my friends and I was in which direction would these consolidation resolve? As it turns, out, it has been to the upside. We're not just seeing the S&P500 and Dow Jones Industrial Average breaking out to new highs, we're seeing similar behavior around the world.

Today we're looking at what I think is the most bullish chart on earth.

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[hide_from visible_to="member"]The Mexican Bolsa has been in a sideways range for over 4 years. This massive consolidation comes after the Bolsa almost trippled off the 2008 lows. After major rallies, markets can consolidate in one of two ways: sideways through time or to the downside through a price correction. The former of the two is by far the most bullish way for prices to digest gains.

Here we are looking at a weekly chart of the $MXX now breaking out to the upside of this 4+ year range. Our upside target is now above 51,600, which is based on the 161.8% extension of the entire consolidation since 2012. With momentum in a bullish range (not getting oversold on any of these declines), I believe this breakout is imminent.

Click Chart to Zoom in 

Mexican Bolsa

There is an exchange traded fund $EWW that tracks the MSCI mexico Index. I think in the short-term this ETF has another 10% of upside left in it. Moving forward we only want long exposure in Mexico if the Mexican Bolsa is above the upper end of this 4-year range.

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