Emerging Markets Are At An Important Juncture!
Tuesday, February 7, 2012. 9.25 a.m. The stock market has been the place to be since October for sure. Climbing a classic wall of worry double–digit gains have been made in many global markets, economic recovery in the U.S. being the main driving force of the increasing optimism. The U.S. economic recovery continues to pick [...]

Tuesday, February 7, 2012. 9.25 a.m.

The stock market has been the place to be since October for sure. Climbing a classic wall of worry double–digit gains have been made in many global markets, economic recovery in the U.S. being the main driving force of the increasing optimism.

The U.S. economic recovery continues to pick up momentum, most recently evidenced by Friday’s surprisingly positive employment report.

And where previously the negative reports from Europe, particularly on the eurozone debt crisis, were dominating the headlines, with concerns the crisis would push Europe into a recession that would spread to the rest of the world, now we have the economic recovery in the U.S. becoming the dominant story in global headlines.

Focus is beginning to move from will Europe pull the rest of the world down, to can the U.S. economy pull the rest of the world up.

The market’s favorable season typically lasts until April or May. Our Seasonal Timing Strategy has sometimes not triggered its exit signal until June.

And the U.S. and many global markets have broken out impressively above their long-term 200-day moving averages, implying their bull markets have resumed after last summer’s substantial correction.

2712b

However, previous pessimistic and bearish investor sentiment began to turn more bullish when January did not bring the ‘crash’ and new bear market the doom and gloomers were predicting, instead becoming the best January in many years.

And the flood of money jumping in in January has many global markets looking short-term overbought, extended above 50-day moving averages to a degree that usually soon brings a pullback at least down to a retest of the support at the m.a.

2712a

But some global markets have lagged behind, leaving investors with a choice of chasing those leaders with strong relative strength that may be short-term overbought, or going with the laggards on hope they will play catch up.

For the most part, emerging markets fall into the latter category, just now seeming to move above 200-day moving averages, as they have gotten a lot of investor attention in January.

2712c

The contrast between the lack of buying in the first three months of the rally and the enthusiasm of the last few weeks is obvious.

Data provider EPFR Global reports that $11.3 billion has flowed into emerging market equity funds since January 1, and the pace has accelerated dramatically, with $3.5 billion of inflow just in the week ended Feb 1.

As a result short-term, emerging market equity funds have surged up 15% so far this year compared to the average global equity fund being up 8%.

So, investors need to think about whether, even though emerging markets have been lagging, still in the vicinity of their 200-day moving averages, they might also be potentially just as overbought short-term. The short-term charts seem to indicate that is the case.

2712d

To read my weekend newspaper column ‘Wow! The Economic Recovery Surprises Continue!’ Click here.

Note to non-Subscribers: We have updated the sample issue of Street Smart Report to a later issue you might find interesting. Click here to access it. Sample issue of Street Smart Report newsletter.

Yesterday in the U.S. Market.

The market closed down fractionally on very light volume.

The Dow closed down 17 points, or 0.2%. The S&P 500 closed down 0.1%. The NYSE Composite closed down 0.2%. The Nasdaq closed down 0.1%. The Nasdaq 100 closed down 0.1%. The Russell 2000 closed down 0.3%. The DJ Transportation Avg. closed down 0.7%. The DJ Utilities Avg closed down 0.3%.

Gold closed down $5 an ounce at $1,720 an ounce.

Oil closed down $0.64 a barrel at $97.20 a barrel.

The U.S. Dollar etf UUP closed up 0.1%.

The U.S. Treasury bond etf TLT closed up 1.0%.

Yesterday in European Markets.

Markets in Europe also closed down fractionally yesterday. The London FTSE closed down 0.2%. The German DAX closed down 0.1%. France closed down 0.7%.

Asian Markets Were Mixed Sunday Night And Again Last Night.

The Asia Dow closed up 0.1% Sunday night, and up 0.4% last night.

Among individual markets last night:

Australia closed down 0.4%. China closed down 1.7%. Hong Kong closed down 0.1%. India closed down 0.5%. Indonesia closed down 0.5%. Japan closed down 0.1%. Malaysia closed up 0.1%. New Zealand closed up 0.1%. South Korea closed up 0.4%. Singapore closed up 0.6%. Taiwan closed up 0.3%. Thailand closed up 0.2%.

Premium Content Area. For Street Smart Report subscribers only, used to provide additional info to that provided in newsletter, mid-week reports, and hotlines.

To obtain access click on the ‘Subscribe’ link below which will take you to an information page on subscribing to Street Smart Report.


*Premium Content*

Please Login or Subscribe to view this content.

Markets This Morning.

European markets are down again this morning. The London FTSE is down 0.5%. Germany’s DAX is down 0.9%. France’s CAC is down 0.7%

Oil is down $.40 a barrel at $96.52.

Gold is up $4 an ounce at $1,725 an ounce.

This morning in the U.S. Market:

This week is a very light week for potential market-moving economic reports, almost none. To see the full list click here, and look at the left side of the page it takes you to.

And the 1st quarter earnings reporting period is just about over. That leaves the market with nothing to guide its intraday gyrations except re-analyzing what has already been reported regarding the economy and whatever turns up in global headlines, which right now is the return of difficulties in negotiations over the Greek bailout plans.

The pre-open indicators are looking soft this morning.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 40 points or so in the early going.

To read my weekend newspaper column ‘Wow! The Economic Recovery Surprises Continue!’ Click here.

Note to non-Subscribers: We have updated the sample issue of Street Smart Report to a later issue you might find interesting. Click here to access it. Sample issue of Street Smart Report newsletter.

Subscribers to Street Smart Report: There is an in-depth ‘Global Markets’ up date from yesterday in the subscribers’ area of the Street Smart Report website. And the in-depth mid-week U.S. Markets update will be there tomorrow.

Non-subscribers: Would you like to improve on your investment returns? We believe we can help, and at very reasonable cost!

Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings.

Street Smart Report Online provides an 8-page newsletter every 3 weeks, an in-depth 6 page interim update every Wednesday on our intermediate-term signals and recommended holdings, an in-depth 4-page ‘Gold, Bonds, Dollar’ update every 2 weeks, an in-depth 6-page ‘Global Markets’ update every three weeks, and special reports and hotline updates as needed. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 25th year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

I’ll be back Thursday morning with the regular Thursday morning post at 9:25 a.m. eastern time. (This blog appears every Tuesday, Thursday, and Saturday morning!).

**** End of Today’s post*****

Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here