NFTRH; Emerging Weakness

Since we routinely cover the emerging markets and also their ratio to the US stock market, I thought I would update some notable changes.

Nominal EEM is right at support now after dropping all week.  A lower low to August would be bearish and frankly, a potential shorting opportunity in my opinion. *

eem

More importantly, EEM vs. SPY, our proxy for Emerging vs. US markets, has lost the August lows and then some.  Okay fine, it is at another support level but today it is breaking below the SMA 200, MACD is going red and RSI has been very weak.

eem.spy

The point is that Emerging vs. US as a relative market to the US is one thin green line away from a breakdown.

Bottom Line

I see no reason to hold the EM’s now and have taken a small loss on EMF.  If the situation degrades just a little more nominal EEM will lose key support and a rationale for holding EM’s as opposed to US stocks (developing their own technical issues in some cases) would be out the window.

* This type of trade can be considered an NFTRH+ update.