Mr. Bear Is Feasting On The Emerging Markets

Mr. Bear Is Feasting On The Emerging Markets

$EEM

From a technical point of view, emerging markets are in a Bear market after falling more than 30% in the past year. This is measured with iShares MSCI Emerging Markets ETF which offers a convenient benchmark for emerging markets.

This ETF trades under the symbol EEM (NYSEArca:EEM).

More than 20 percent of this ETF’s assets are invested in China. Fifteen percent of assets are in South Korea and Taiwan is the fund’s third largest holding with India and South Africa rounding out the top five. Smaller positions in Brazil, Mexico, Thailand and Poland show how diversified this ETF is.

Emerging market equities never fully recovered their Bear market losses and EEM has not reached a new all-time high since October 2007. EEM is in now and has been a renewed downtrend since September 2014.

Emerging markets are in a Bear market.

Participants in the US use aggressive stock indexes to gauge the strength of the stock market. They believe growth stocks and other aggressive indexes lead markets both up and down.

Participants are showing their comfort with the future when they buy aggressive stocks, and when they turn Bearish, they turn away from aggressive stocks towards defensive sectors. Declines in the more aggressive indexes are the 1st sign of a Bear market.

For international participants, emerging markets are the aggressive index.

With emerging markets under extreme pressure, participants are signaling their concern with the global economy. With no turnaround in sight for these emerging markets, developed markets will follow emerging markets lower.

Mr. Bear is here and feasting. Be prudent, and pay attention, the name of this game is to make money.

Have a terrific weekend,

HeffX-LTN

Paul Ebeling

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