Argentina is the best performing stock markets in 2024. The Global X MSCI Argentina ETF (ARGT) is up +48.88% (in USD) on a rolling one-year basis (see below).
ARGT has presented some excellent trade entries over the last few weeks:
- A = 5/8. Undercut of 16/4 low and rally. Also a moving average undercut and rally using the 200d moving average. This was the day of the Japan carry trade capitulation sell off.
- B = 5/8. Second setup on the same day. Rally through the 2/7 low. Big volume was an important clue
- C = 8/8. Trendline breakout, rally though the 50d moving average and a pocket pivot (i.e. up on volume greater than the volume on any down day over the prior ten days). There was also a double-bottom entry the following day on 9/8 when ARGT cleared the midpoint of the "W" shape that forms the double bottom (i.e. high on 15/7). This is also where the potential head-and-shoulders top (see below) pattern was busted, which is a bullish sign.
- D = 29/8. Moving average undercut and rally though the 10d moving average. This followed a seven-day consolidation where ARGT held tight (i.e. within 5% of the 20/8 high) on extremely low volume. Followed through on the next day with a pocket pivot.
- E = 11/9. Breakout above the 7/5 high on above average volume. Also a pocket pivot.
- F = 16/9. Key reversal day (i.e. opens above the prior close, shoots up and then closes below both the open and the prior close) on high volume. This could be used as an aggressive short entry. Notice that all of the swing peaks over the last five months have ended with a key reversal day (blue arrows).
It looks like we're headed for a retest of the 65.82 breakout level (i.e. the 7/5 high), the round number of $66 and the rising 20d moving average.
Selling volume on the 16/9 reversal day and 17/9 is significantly lower than prior key reversals.
This suggests that demand > supply for ARGT. This strength means there's a chance that ARGT undercuts and rallies off the 10d moving average instead of the 20d.
Ideally a pullback to the 20d would be better, as it would work off some of the overbought condition and be a better setup for a sustained rally. That said, we can't control what the market will give us.
The next major support level to the downside is the $63.80 to $64 range. That's the zone of the 31/5 high, the 20/8 high and the 10/9 low. Failing that, it's the top of the long-term uptrend channel (see below) around $62.
Entering on setups A & B would have required some courage as ARGT had triggered a head-and-shoulders top (shown in orange) with a nasty move to the downside. That said, the strong bounce on high volume on 5/8 had all of the features of a shakeout low.
Zooming out, we see that ARGT started its long-term uptrend well before Milei was elected. Uncertainty around the Argentine election caused ARGT to briefly fall out of a stage two uptrend (i.e. 10w moving average above 40w moving average). Milei's win triggered a buyable gap up in ARGT.
Since then, ARGT has formed two additional bases (or consolidations), a tight flat base between November 2023 and March 2024 and a more volatile double-bottom between May 2024 and September 2024. ARGT is now extended from this base and the long-term uptrend channel. That said, the long-term prospects for Argentine stocks look bullish.
The table below shows the main US Dollar denominated ETF for the world's 29 largest economies, ranked by GDP. Argentina is #22.
DISCLAIMER
This post is for educational purposes only. It is not a recommendation to buy, sell, hold or do anything at all. I don't know you or your circumstances, which are probably different from mine.
I'm trusting you to act like an adult. This means that you:
• Understand that no method of analysis is perfect
• Take responsibility for your decisions
• Set your risk level and decide on a risk management strategy before trading
• Don't "bet the farm" on any single trade
• Act quickly (i.e. sell) if a trade doesn't live up to your expectations
