Just When You Thought Selling Was Done...

Yields have pulled back on Friday, easing selling pressure in the stock market, but the U.S. dollar index is rallying back above its 50-day moving average. iShares Mexico (EWW) is below long-term resistance and has a small topping pattern.

FXI is also battling at support/resistance.

Italy right where it has failed every time since 2008. Haven't been watching this one, but if something is differernt this time, Italy should break through. Otherwise...

Steel ETF

The regional bank ETF hit a resistance line yesterday morning that is from the 2008 top and was hit in June 2018.

GDX perfectly hit my suppot line dawn from teh 2016 high. A strong dollar should weaken it, but I like the risk/reward here because it's right at support.

Latin America on the Brink

A stroll through charts in Latin America.

First currencies. USDCLP (Chile). Base, test, boom.

USDBRL (Brazil). Base, boom.

USDMXN (Mexico). Fakeout to breakout.

USDPEN (Peru) has a long way to go if it follows Chile and Brazil's currencies.

Country ETFs argue for a bottom, but there are also topping patterns that point to huge declines if they complete.

Individual stocks follow. These aren't selected for any particular reason as a group. Some are airport stocks that could sink if coronavirus spreads, some have nice patterns. My focus is on banks because of the currency component.

Mexico Ready to Move

Mexico and the peso are at an important juncture. The peso has one of the most bullish charts I've seen relative to the U.S. dollar.

iShares MSCI Mexico (EWW) also made a similar breakout, but hasn't sustained it.

Markets On The Brink, Again

In the near-term, whether coronavirus spreads or not may determine whether a break comes now or is put off into the future. Important assets such as energy, copper, coal, Brazilian real, Mexican peso, emerging market bonds and more are at, near or broken major support/resistance. These are in alphabetical order.

Emerging Markets Ready for Downturn

FYI: Most of these patterns could be easily invalidated by a sharp rally next week, but a downturn in EMs would conform with my macro outlook.

August has been a historically bad month for emerging markets. Indonesia is a worst-case example of this with both August and September negative for the Indonesia ETF (EIDO). It has a limited history though. EEM goes back farther and it too is historically negative in August. I do not place much stock in seasonality, by the way, but I do believe one should pay attention when "the stars align."

The blue lines are major support/resistance going back to 2011 and 2007 peaks.

The China ETF (FXI) could resolve bullish or bearish, but the gap between the support and resistance is only 5 percent.

India ETF (EPI) has broken its uptrend.

Brazil (EWZ) could stand to rally given its more localized issues, but it too has experienced a failed breakout.

Malaysia (EWM)

South Korea (EWY) isn't an emerging market, but its also experience a failed breakout, negative for EMs considering it is highly reliant on trade and China.

Emerging market local currency debt has broken out, but this was partially driven by falling interest rates. A strong dollar rally would turn this into a failed breakout as well.

Mexico (EWW) could be bottoming on extreme negative sentiment, but in context of everything, a breakdown is possible.

U.S. Dollar Index Bullish ETF (UUP) hit a new 52-week high on Friday.

Finally, here are a number of currencies. Many sport basing patterns similar to the broader U.S. Dollar Index and trade-weighted USD. There will be no significant breakdown in emerging markets without a major breakout in the dollar.