[Chart of The Week] Emerging Outperformance From EM?

JC Parets
October 3, 2019

In our last Chart of The Week, we took a look at Pharmaceuticals to identify opportunities on the short side of that sector.

Today we're taking a step back and at the performance of Emerging Market equities as an asset class.

Here's a chart of Equal-Weight BRICKS/Equal-Weight Developed Markets, which has been basing for most of the last 7 years, carving out a bottom after falling sharply since 2010.

Click on chart to enlarge view.

While it may appear not much has changed here, we're focused on the recent divergence between prices and momentum. Since May, prices have been falling yet momentum remained out of oversold territory, helping spark a rally after prices briefly made new year-to-date lows.

We think this could be the catalyst needed to push the ratio back towards the top of its long-term range. As long as prices are above their year-to-date lows, Emerging Markets look poised to outperform.

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Allstarcharts Team

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