Man you guys really love your mystery charts.
I spend the time to breakdown a sector or stock from a top/down perspective and I get pretty decent feedback. But one mystery chart and the twitterati goes wild, my inbox gets bombarded with people trying to guess what it is, the comment section on the blog fills up quick…..it’s great. You guys are funny.
The truth is I really like these mysterious charts as well. They eliminate any preconceived notions that you might have had on a particular asset. We obviously focus the majority of our attention on price, and this exercise emphasizes that as the priority.
Earlier this morning I posted a blank chart showing a nice big rounding bottom. This chart actually represents the S&P500 relative to the MSCI Emerging Markets: $SPY/$EEM spread.
So based on this chart, would you rather be in emerging markets or in US equities?
Seems like a no-brainer to me. I would look for the spread to break down back below this broken level of resistance as a signal that would suggest otherwise. If prices do fall back under this breakout level, I would have to reevaluate the whole US over EM thesis for equities. Until then, we’ll stick with the trend. It looks like it’s heading higher. Much higher.
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Tags: $SPY $EEM