A remarkable move lower on the EM/DM spread over the last 6 sessions has taken EM equities from breakout mode to holding a key support level versus their developed market bogey, the SPX.

A 567bp 6 session move has the EEM trading at .1730 vs the SPY or back to the same level from May of 2017 before a glorious summer for EM equities. The size of this move is almost half of the move that EM suffered at the election in November 2016.

For traders it should be noted that for all of the strength in EM equities and relative value on P/E and EPS growth, this pullback leaves the asset class only 14% above where it was at the lows of Jan 2016.

Bottom line:

After 6 years of underperformance EM equities rallied back on solid fundamentals which remain and support renewed allocation.

The extreme pullback over the last 6 sessions offers investors a chance to own the asset class relative to the SPX at a level that we expect to hold and which is attractive on relative value.

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