We're Selling Emerging Market Stocks

JC Parets
January 26, 2020

In case you missed it yesterday, we're selling stocks up here and buying bonds.

I tried to outline the levels as best as I could. Let me know if you have any questions!

Quickly today, I just wanted to point out one chart of Emerging Markets that really stands out. Remember this Index is broken down as follows: China 32.40%, South Korea 11.84%, Taiwan 11.71%, India 8.13%, Brazil 6.78%, South Africa 4.25% & Russia 3.84%. 

It's basically 72% Asia and 10% Latin America.

Here's what it looks like:

I see the index failing to hold its breakout attempt this month and if we're below 45, it's vulnerable for a severe correction. With momentum confirming this failed breakout with a bearish divergence and relative strength hitting new 16-year lows, I'm not sure I can find a reason to own this. The path of least resistance here is now lower, not higher.

We want to be aggressive sellers of Emerging Markets if EEM is below 45. This is NOT, I repeat this is NOT something we want to own if it is below 45.

Tell me what you think!

JC

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