Casual observers and investors in EM occasionally jump in and out of themes and often this is exactly how to trade EM successfully.  Those of us who are dedicated to the asset class and have invested in it through multiple cycles may get too close to the fire, and miss trading signals that demand a more tactical approach. 

Six Weeks ago Jeffrey Gundlach ( not implying Gundlach a casual investor in EM) got the attention of the casual observers and investors by pointing out how he was getting long EM, and identifying the SPY as a relative value pair.  After 3% of instant outperformance (related or not) EM then sold off 3% on a combination of weaker macro, Dollar rebound, and no question oil has not helped.  The index failed to break out past the pre-election level of .1750 on the ratio as if on queue.

The chart is turning again.

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