Today I want to talk about the big underperformance out of India. This region has been getting killed all year down over 22% YTD. But now this week it’s taken took out all of the lows for the year and is sitting at the lowest levels since the Spring of 2009. This is according to the WisdomTree India Earnings Index, which is comprised of companies in India that are profitable and eligible to be purchased by foreign investors.
Here is a daily bar chart of the ETF that tracks this particular index – $EPI. Notice the big breakdown below, and not just this year’s lows, but all of the pivot lows for the last few years:
From a measured move perspective, we can see a pretty clear head and shoulders pattern that takes us down to about $14.00. This target is based on the 3.25 difference between the top of the head and the neckline. After that we have a 161.8% fibonacci extension down near $12.00.
As long as prices in India remain below these broken levels, I see no reason to own it. On the short side, the risk management here is to stay in it below the freshly broken support. That’s how I see this one…
Tags: $EPI $PIN $INDY