With domestic markets starting to hit a rough patch, we'll look overseas for opportunities. Today's foreign opportunity, though, really isn't a new one. We seem to keep coming back to Latin American stocks over and over. But then again, this region is one that deserves a closer look. Since the end of 2002, the Dow Jones Latin America Index (A3DOW) is up 185 percent - and it's made those gains with a lot more consistency than we've seen from the S&P 500. We think there's more of the same on the way.

We'll be using the chart of an exchange-traded-fund to illustrate the technical bullishness we see for these stocks. The actual index chart looks about the same, but suffers a couple of quirks we'd like to avoid. Plus, we can get volume data for the exchange-traded fund, which is actually a key piece of our analysis. The ETF we're going to be looking at is the iShares Latin America 40 Index Fund (symbol: ILF).

The attraction here is largely to the consistency with which ILF shares make progress. Typically, big gains lead to big drops -that's a big part of the reason we want to avoid U.S. stocks right now. But the 61 percent gain that the iShares fund has made over the last twelve months really isn't all that intimidating, even though it's the second best-performing ETF over that period (the best is the Brazilian ETF, symbol:EWZ, with a gain of 72 percent). The reason we can buy this strength is that this index fund is not technically overbought in the same way the NASDAQ Composite is currently overbought. Rather, we've see ILF gently roll along on the upper side of its 50 day average since early in 2003, with only a couple of minor dips under that key moving average. After some consolidation last week, the fund again looks poised for more gains. Take a look at the daily chart below, then read on for our analysis of the weekly graph.

iShares Latin America 40 Index Fund (ILF) - Daily

As we mentioned above, it's understandable to not buy into what appears to be the latter stages of a rally. But with this particular geopolitical region, this may actually be the early stages of a very long-term move. On the weekly chart, we've plotted volume bars. Since the middle of 2004 - and really since late 2003 - we've seen the buying volume for this ETF grow exponentially (keep in mind it's the ETF's volume, and not the volume of the Latin American exchanges). Last week was the highest volume week ever for this fund; it traded 641,100 shares. The volume for the Latin American indexes was similarly strong, so clearly there's some serious growing interest in these stocks. We think that strength will continue to carry this market to new highs, and we expect to see an acceleration of gains now that we have a new bullish MACD divergence.

iShares Latin America 40 Index Fund (ILF) - Weekly

 Price Headley is the founder and chief analyst of BigTrends.com.