Our spread analysis of Emerging Market equities vs Developed Market equities failed to breach the .2300 level as we proposed last week after an 11% outperformance move over the preceding 4 weeks. 

Emerging-marketsOur view remains this spread is to be bought but that no real rally is a straight line.  Emerging Markets (EEM, quote) have pulled back 3% in last 3 days overall, but Emerging Markets have underperformed Developed Markets by 3% on last two sessions. 

We remain committed to trading the spread at key levels.  We would be buyers of the spread back at .2200 where we would have seen a 5% correction on the spread.  The combination of escalating Russia (RSX, quote) /Ukraine events, disappointing Chinese data (FXI, quote) and technically overbought conditions lays the groundwork for this pullback. 

Emerging Market fund flows are due out in 2 days and we expect Emerging Markets will continue positive run but with a smaller sized inflow read.

Emerging Markets - EmergingMoney.com

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