Emerging Market equities are outperforming the SPX today by 1.2% and have now rallied 7.6% in 2 weeks even as the SPX hits all-time highs.
Emerging Markets Fund flows tell us that sentiment has reversed dramatically after a period of extreme negative sentiment that had come after years of underperformance.
That adds up to a powerful reversal that could be unfolding. Emerging Markets rally in advance of actual fundamental turnarounds and in places like Brazil (EWZ, quote) and even Turkey(TUR, quote) that is what we have seen.
Look at .2300 as the level on the spread (+4% higher) to take profits. This .2300 level is the line in the sand that had held since lows of '09 but caved at the start of the year with current account issues and political turmoil. The low is in...