Recently, EEM has formed a very interesting inverse head and shoulders pattern relative to SPY. If this pattern is confirmed, emerging markets could experience a significant bullish cycle in the coming period.

Looking at EEM's top ten holdings makes it clear that these are leaders in their respective fields. The highest weight is TSMC, accounting for nearly 10-11%. This semiconductor manufacturer’s performance directly impacts the entire tech supply chain. Tencent Holdings and Alibaba follow closely, with weights between 5% and 3.3-3.9%.

In addition to these tech giants, Samsung Electronics, SK Hynix, and other memory chip manufacturers also hold important positions. There are also Indian companies like HDFC Bank and Reliance Industries, as well as Xiaomi and Pinduoduo, covering industries from hardware manufacturing and internet to financial services. The overall weight distribution is relatively balanced, reducing the risk of over-concentration in a single company.

From a technical perspective, if the inverse head and shoulders pattern confirms a breakout, emerging markets could indeed outperform US stocks for a considerable period. This pattern itself indicates a potential reversal, and combined with the fundamental support of these key stocks, the outlook remains worth watching.