Emerging Markets are showing signs of life at least for the short term. After years of underperformance discussed in previous graphs. EM is at extreme oversold lvls vs DM and showing signs of life. A weekly close above the recent downtrend (blue line) would be encouraging for a period of outperformance with eyes on our longer term charts previously published where we made our case for EM outperformance for the next decade based on technicals and fundamentals.
This is interesting. I'm getting crushed in my 401K with S&P, TIPS and Russel2K. I desperately need some protection in this rigged stock market. Yes, I'm considering EEM or some kind of emerging market play.
PD_Capital
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@Techbest, EM is unlikely to be good hedge vs a falling S&P. What this idea suggests is that EM will outperform S&P over the next few years, but not necessarily by going in a different direction.
jwow5555
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still trying to figure out how this making sense...if Feds is going to raise rate, DXY will go up, that means bear for EEM, right? how come the charts show otherwise
PD_Capital
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@jwow5555, it is a relative value trade (Long EM vs Short S&P) and there are a few possible scenarios where this idea works. a) EM goes up while SP goes sideways or down, b) Both go up but EM goes up more than S&P or c) Both go down but EM goes down less than S&P.
Techbest
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@PD_Capital, I'm interested in (EM goes up while S&P goes sideways or down. Do you know when in history of EEM whereby this happened?