Colombian voters went to the polls on Sunday to choose their next president.
For decades, conservatives or right-of-center moderates have run the country.
Voters want something different. After counting the ballots, leftist candidate Gustavo Petro received more than 40% of the vote.
That forced a runoff, since a candidate needs 50% to win an election. Petro faces businessman Rodolfo Hernández, who won 28% of the original vote.
Though the outcome of the election is uncertain, when voters choose a president on June 19, policies will shift.
Colombian stock traders appear happy with their choices. The iShares MSCI Colombia ETF (NYSE: ICOL) is on a Greed Gauge buy signal.
ICOL’s a Buy on Greed Gauge
How My Greed Gauge Works
My Greed Gauge measures how aggressive buyers are in a market. This is shown at the bottom of the chart.
Green shading highlights indicator buy signals.
I designed this as a short-term timing tool with quick responses to shifts in sentiment. Quick sell signals reduce the risk of holding positions as they decline.
In the chart, ICOL bottomed on May 19, the same day U.S. stocks recorded a bottom. ICOL was relatively stronger than the S&P 500, holding above its previous low in the most recent sell-off.
Strength in Change Is Bullish for ICOL
The strength reflects hope that the election will bring change in Colombia. Both candidates promise a crackdown on corruption, shifts in how the country attacks the drug cartels and overhauls of economic policies.
Bottom line: Ambitious agendas often stall after politicians are elected and they face the reality of governing. But ICOL is attractive to value investors at its current level.
The price-to-earnings (P/E) ratio of the average stock in the ETF is less than 12 — more than 50% lower than the P/E ratio of the S&P 500.
Other metrics confirm the undervaluation of ICOL.
Now could be the ideal time to add this country’s ETF to a diversified portfolio.
This was only one buy signal that flashed on my Greed Gauge recently.
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Michael Carr is the editor of True Options Masters, One Trade, Peak Velocity Trader and Precision Profits. He teaches technical analysis and quantitative technical analysis at the New York Institute of Finance. Follow him on Twitter @MichaelCarrGuru.