Are Global Markets Playing A Dangerous Game Of Follow-The-Leader? by Jennifer Thomson, Gavekal Capital
As we noted earlier today, the Emerging Markets are really struggling when you look at a variety of our market internals indicators–especially compared to Developed Markets. Here we go into a bit more granular detail, this time looking at the momentum of stocks in each country as depicted by the percent of issues with the 50-day moving average above the 200-day moving average. As most readers realize, the failure of the 50-day MA to stay above the 200-day MA is typically an indication of a shift in the longer-term trend of a given security or, as in this case, a group of equities. The main takeaway here: Emerging Markets don’t look much better than in any of the charts we showed earlier– and momentum in a number of the so far more resilient Developed Markets’ equities appears poised to follow the EMs on their sharply lower trajectory.