From the desk of Steve Strazza @sstrazza
Welcome to our latest RPP Report, where we publish return tables for various asset classes and categories, along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2020/08/ScreenShot2020-08-17at3.31.10PM-300x183.png)
We consider this our weekly state of the union address, as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.
In our RPP Report from the end of August, we discussed how the weakest areas were registering failed breakdowns and digging in at support.
In our most recent report, we focused on how the strongest areas were making fresh record highs. Things were looking up for the bulls... but that changed once again.
We've talked about how it's been a back and forth battle with neither buyers nor sellers making any material progress for months now. And that's exactly what we're continuing to see, as bears have regained control again, pushing the major indexes lower for five straight sessions coming into this week.
For this reason, we thought a mid-week edition of the RPP would be appropriate to give us time to see what kind of follow-through would occur following the recent selloff.
In this week's report, we're going to talk about this near-term weakness but also some positive developments, like the healthy expansion in participation for ex-US equities in recent weeks and months.
I'm working with a broken hand these days, so we're also going to try and let the charts do most of the talking. Don't worry, there are plenty out there that have something to say. Let's look at some now.
First up is our Global Index table:
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/09/globalindx.png)
The first thing that stands out is the recent performance from Japan's Nikkei 225, as it's been the leader across all short- and medium-term timeframes. Here's the chart:
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/09/NI.png)
Following a breakaway gap out of its year-to-date continuation pattern, the Nikkei is pressing toward its highest level since 1990!
How about the million-pound gorilla in the room? Let's check in on China now:
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/09/SSEC.png)
The Shanghai Composite closed last week at its highest level in over six years. Just last month, the index was testing fresh nine-month lows. At that time, we discussed what it could mean for global markets if China could turn things around. Here's what we said:
What better place for Chinese Tech to bottom out than at the very same level we’ve seen this relative trend reverse so many times in the past? If these stocks catch a bid, then expect EEM to catch a bid as well. [And sentiment] couldn’t be worse according to our magazine cover indicator. It sure seems like all the seeds have been planted for Emerging Markets and China to carve out a bottom here.
And it looks like that's exactly what's happening now, as China has been among the top global performers in the time since. It may take some time before we see a decisive breakout though. The Shanghai is struggling with this level once again and is lower by about 2.5% so far this week.
So, let's check in on Emerging Markets now. Here's EM Ex-China $EMXC along with the MSCI EAFE Index $EFA:
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/09/EXMCEFA.png)
As you can see in the chart above and our international table below, EM continues to lag developed markets over the short and intermediate term.
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/09/intletf.png)
We continue to see participation broaden beneath the surface, even in underdeveloped countries. Here's Qatar $QAT:
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/09/qat.png)
Price is knocking on the upper bounds of a roughly six-year rounding bottom reversal pattern.
If we get a decisive move above the 20-21 area the bias is higher, and we want to be long with a target at the all-time highs of around 27.
Here's Japan $EWJ again, but this time in USD terms instead of local:
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/09/EWJ.png)
And here's Argentina $ARGT showing leadership in the Latin America region:
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/09/ARGTvsILF.png)
Let's hop over to the US now.