Check Out The Chart: Colombia ETF Could Be Ready To Rock

Following a year in which it was one of the best performing emerging markets ETFs, perhaps the best thing that can be said of the Global X FTSE Colombia 20 ETF GXG, this week's “Check Out The Chart” candidate, is that GXG is not the comparable ETF tracking Brazil, Chile or Peru. While GXG is flat year-to-date, the iShares MSCI Brazil Index Fund EWZ and the iShares MSCI Chile Investable Market Index Fund ECH are both down about 6% while the iShares MSCI All Peru Capped Index Fund EPU is down over 25%. GXG's tepid performance is a condition the chart indicates probably should not be lasting much longer. A look at the chart shows that since March, the ETF has put in a series of higher highs and higher lows. Add to that, in recent weeks, GXG has become trapped in a tight range of $20.50-$21.50 and even that downside is stretching things a bit. Volume has dried up as the summer doldrums have set in, but that could be more a sign that sellers are losing their vigor rather than buyers being chased away. Assuming we agree that GXG has a strong technical outlook and even if that cannot be agreed to, ignoring the South American country's strong fundamentals could prove perilous. The country now has investment grade standing with all three of the major ratings agencies and inflation isn't the issue in Colombia that is in Brazil or some of Asia's emerging markets. A return to the risk-on/commodities trade will also benefit GXG as Colombia is major copper, gold silver producer and is also becoming a bigger player on the Latin American oil stage. Ecopetrol EC, Colombia's state-run oil company and GXG's largest holding, is one of the few state-run enterprises worth owning. Yes, this is a far better stock than Petrobras PBR and to top it all off, Colombia's banking sector should see some consolidation in the medium term and GXG is 52% allocated to financials. Or you can just forget the fundamentals and check out the chart.