Checkout The Chart: Fun With The Philippines?

This week's edition of “Checkout The Chart” brings us to an interesting corner of the globe to an ETF that is now marked by an inverse head and shoulders chart formation, one of the more potent patterns in the lexicon of technical analysis. We're referring to the iShares MSCI Philippines Investable Market Index Fund

, the lone ETF devoted exclusively to this fast-growing Asian tiger economy. EPHE made its debut in late September 2010 and has used its first-to-market status to accumulate over $54.3 million in assets under management, a very nice haul in less than one year of trading. So let's have a look at what's shaking with EPHE in the here and now. Traders know that the regular head and shoulders pattern can be an efficacious short signal, but the same is true of the inverse head and shoulders pattern from the long side and that's what makes EPHE worth a look from a technical perspective. EPHE's second trough, or the “head” corresponds with its 52-week low at $21.36 set in March. The ETF did what it was supposed to do and that is rise from there, forming the right shoulder in the $24 area and has since declined a tad. While more declines are probably on the way, simply by virtue of a weak broader market, it's critical to remember that in an inverse head and shoulders the decline from the right shoulder will NOT take EPHE as far down as the second trough, in this case the 52-week low. In the essence of doing things by the book, it would probably be best to wait for EPHE to form its third and final trough and then place a buy order above $25, which is neckline resistance. In at $25 and riding EPHE back to its 52-week at $27.50 still makes for a decent 10% winner and the ETF's last move from $25 to $27.50 only took a few weeks, so this probably won't be a buy and hold strategy. Checkout the chart for an opportunity that could put your portfolio head and shoulders above the rest.