×

Buy the world’s riskiest stocks: Technician

One of the world's riskiest investments may be getting ready for some relief rallies.

Frontier markets, also known as pre-emerging markets, have seen significant pain in the past year. But according to some traders, the recent surge in oil may become a boon for those looking for a bounce in these exotic equity investments.

Crude rallied 8 percent Wednesday, even as oil inventories climbed to record highs. Technician Craig Johnson of Piper Jaffray said renewed strength in oil could drive the frontier markets ETF (FM) higher, in what he sees as "more of a trade than a longer-term investment."

"This index is still making a series of lower lows and lower highs, but it's going to be very correlated to what we see happening to the overall price of oil. To us it looks like there's a bit of a relief rally opportunity in oil," he said Wednesday on CNBC's "Trading Nation."

Because frontier markets are less established than emerging and developed markets, they usually come with higher risk and returns. The frontier markets ETF has fallen 24 percent in the past year.

Read More One sign that oil is losing its hold over markets

Within the ETF, the largest holdings include assets from countries such as Kuwait, Argentina and Nigeria.

Neil Azous of Rareview Macro said that low oil prices have created a buying opportunity within frontier markets. Over a long-term period, select markets within this group may provide healthy returns, he said.

"There's probably some type of sliver of allocation that makes sense for different investors, and you should seek out a specialist for that particular segment of the market," Azous said Wednesday on "Trading Nation." "If you have a six to 10 year time horizon, some of these frontier markets can be really wonderful opportunities."

Read MoreBeware this hurt and confused market: Strategist

Want to be a part of the Trading Nation? If you'd like to call into our live Wednesday show, email your name, number and a question to TradingNation@cnbc.com.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

Read more

Connect