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Here's how emerging markets are surprising investors

Has the world gone mad?

The situation between Russia and Ukraine hasn't been solved. There are violent demonstrations against China in Vietnam. Turkey's citizens are taking to the streets to protest Tayyip Erdogan's government once more. And, Thailand's army has declared martial law in that country.

Yet, the ETF that tracks emerging markets are surprisingly up. In fact, the iShares MSCI Emerging Markets ETF (EEM) is up 10 percent in the past two months while the U.S. benchmark S&P 500 index is flat.

One could point to India's election of Narendra Modi as prime minister as a potential catalyst for the EEM's climb. The WisdomTree India Earnings Fund (EPI), the largest ETF tracking Indian stocks, is up 6.4 percent in the past week alone. However, the EEM has less than 7 percent exposure to India. Instead, a little more than half of the index comprises stocks from China, South Korea, Taiwan and Brazil.

(Read: Money won't come cheap for China banks' $120 billion funding spree)

"This has more to do with interest rates and interest rate expectations," said Gina Sanchez, founder of Chantico Global. "At the beginning of this year, everybody was expecting interest rates to rise. Money was just fleeing, expecting the dollar to strengthen and all the currencies to crash. As that didn't happen, we saw money coming back into emerging markets, recognizing that they were severely underpriced."

In a roundabout way, some of the turmoil is helping components of the EEM, according to Sanchez. "As all of this political turmoil has come up, it actually continues to keep interest rates low," said Sanchez, a CNBC contributor. "That's actually been a boon for emerging markets."

However, Richard Ross, global technical strategist at Auerbach Grayson, says the EEM's charts should temper investor enthusiasm. Despite rallying from a very bullish double bottom over the past couple of months, the ETF is near its downtrend resistance at around $42.94. A chart of the EEM over the last five years also shows some trouble, says Ross.

(See: CNBC's Emerging markets coverage)

"The first thing that hits you when you look at a longer-term chart of EEM is the fact that you're not at new or multi-year highs as you are in the U.S. and Europe," Ross said. "Right there, that's some relative weakness."

Instead, Ross sees the EEM stuck in a trading range between $35 and $45 per share.

"It's very difficult to get too excited about emerging markets," Ross said. "I think you want to be a seller at the high end into resistance and a better buyer amidst those fears when we get to the low end of support. I wouldn't be surprised to see this rally peter out and get a chance to buy those emerging markets a little bit cheaper."

To see the full discussion on the EEM, with Sanchez on the fundamentals and Ross on the technicals, watch the above video.

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