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Friday, April 25, 2014

EMERGING MARKETS? THE SHINE IS OFF: here's what you need to know


SPY and QQQ are both pooping a lung today, but it might be interesting to look a little deeper.

Here's SPY versus EEM:


You can see that emerging markets became a fad by early March, and the long-term trend of SPY outperforming EEM that had gone on since 2011 reversed. Temporarily. You can see this better on the weekly:


See? US has outperformed the emerging markets since 2011 at least. The recent EEM buying binge of the past month only took the ratio down to its weekly SMA(50). It's been down there before, and always turned around and gone back up. Because the US is awesome and the emerging markets suck.



And the same situation for the QQQ vs EEM ratio. This despite there supposedly being a tech bubble that's bursting and all. Frankly, the chart proves that if there's a bursting bubble in anything, it's in emerging markets, not US technology stocks.


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