Cheaper oil from Iran deal lights a fire under emerging markets — ride the momen
Thesis
The reopening of the Strait of Hormuz is causing oil prices to tumble, which acts like a massive tax cut for countries that have to import most of their fuel. Cheaper energy means lower costs for businesses and consumers in these regions, which is why emerging market stocks just hit a record high. By buying a broad emerging markets fund, you are betting that this relief will translate into sustained corporate profit growth and continued stock market momentum as the global economy adjusts to lower fuel costs.
Strategy approach
Build a momentum strategy on EEM (Emerging Markets ETF) using the daily timeframe. Entry: Price crosses above the 20-day Simple Moving Average (SMA) with RSI(14) between 50 and 70. Exit: Price closes below the 20-day SMA. Risk management: 3% trailing stop-loss.