Email of the day (1)
Comment of the Day

May 15 2013

Commentary by David Fuller

Email of the day (1)

On MSCI Emerging Markets
""Looking at the charts you mention in 1) & 2) above - MSCI World ex USA & MSCI Emerging Market iShares (EEM US), they remain underperformers, becoming somewhat oversold but we have yet to see evidence that they are finding support from underlying trading. Re 3), I agree that high-beta MSCI Emerging market equities are still underperforming the S&P 500, having resumed their decline recently"

"I was wondering how from a chart characteristic point of view would you assess this index in May 2013, in relation to a long-term investing point of view entrance point?"

David Fuller's view Sure, and as a general comment, one's first impression on looking at a chart is often the best impression.

Looking at this chart of MSCI Emerging Markets divided by the S&P 500, it is still underperforming. However, it has been falling relative to S&P for about two-and-a-half years, and is closer to the 2008 inflection point. Therefore I would not assume that the S&P will continue to outperform over the medium term. Looking at the MSCI Emerging Markets Index on its own, it has lateral resistance near 1100 but I would continue to give the upside the benefit of the doubt provided the sequence of higher reaction lows is maintained.

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