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Investors are dumping stocks to buy this

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Why Hong Kong stocks could be in big trouble

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Why Hong Kong stocks could be in big trouble

Investors are dumping the stock indices and are putting their money in surprising places.

Last week, nearly $4.4 billion were pulled from the ETF that tracks the S&P 500, the SPY. Another $773 million left the QQQ, which tracks the NASDAQ Composite, and $748 million left the IWM, which tracks the small cap Russell 2000 index.

Where did all that money go? Well some of it went to sector specific ETFs. The energy ETF, the XLE, took in $679 million, while the XLU (utilities) and IYR (real estate) each took in $482 million. And, the EEM, which tracks emerging markets stocks, saw inflows of $434 million.

According to Gina Sanchez, founder of Chantico Global, the EEM is the best bet of the bunch.

Emerging markets suffered dramatically at the beginning of the year because of concerns in Ukraine [and] concerns around growth," Sanchez said. Though the situation in Ukraine continues to be an issue, she noted, it's not as worrisome to the markets as before. Because the market may have overestimated risk, "those valuations got so cheap that there was a tremendous buy there."

(Read: Why the market isn't panicking over Ukraine)

A recent spike in Treasury Inflated Protected Securities (TIPS) may possibly augur well for emerging markets stocks.

"If we see some inflation expectations come back into the market in the U.S., that would be very supportive of a continued rally in emerging markets," Sanchez said. "So, I think that's the key right now to continuing to play that trade."

Richard Ross, global technical strategist at Auerbach Grayson, took the opposite position on the EEM based on the technicals.

"Despite the fact that we're seeing pockets of strength within the emerging markets,"  said CNBC contributor Ross, "my outlook for the benchmark ETF remains muted at best and, in fact, I'm skeptical of the recent advance."

On a short-term basis, Ross sees the EEM, which closed Monday at $41.02 per shares, as testing on the downside at around the $36 to $37 level. But, based on its price movement over the past five years, Ross foresees more worry for the ETF.

(Watch: Stocks may get rude awakening: Mohamed El-Erian)

"If we take a big picture view and look longer term, I think this is where the story starts to unravel for the emerging markets," said Ross about the EEM's weekly chart. "We've been in a well-defined trading range for just the past three years, really going nowhere, trendless. And, in fact, going all the way back to 2009 – almost five years now – it looks like one big giant distributive top."

While breaking below that pattern could set the stage for the EEM's next bull move, Ross doesn't think that moment is just yet. But there could be other opportunities.

"I would be a seller here," said Ross of the EEM. "I would really be looking to the frontier markets which is really a corner, a subset of that emerging world where you're seeing some real strength and some real outperformance."

Since February 3, the EEM has gained 7.4 percent while the Guggenheim Frontier Markets ETF (the FRN), is up 13 percent.

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

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