Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Buy Emerging Markets, But Carefully

Stock-Markets / Emerging Markets Oct 12, 2013 - 02:46 AM GMT

By: Sy_Harding

Stock-Markets

Emerging markets were under pressure all summer from fears that the U.S. Fed would begin to taper back its QE stimulus. More recently, it was widely expected the battle in Washington over raising the debt-ceiling would add to the selling pressure.

However, charts reveal what a market is actually doing, not what people think it should be doing. And in reality, emerging markets in general have been rallying off an oversold condition beneath 20-week moving averages, even as the U.S. market was pulling back from its September peak on the new debt-ceiling worries.


Essentially, emerging markets have been struggling since 2011. Many have been in bear markets, with declines of as much as 35%, and with only bear market rallies since 2011.

Given the risk in individual countries these days, we prefer a diversified emerging-markets mutual fund or etf, rather than choosing individual countries or individual stocks. And given the potential over-valued condition of the U.S. market, and its proximity to five year highs, there may well be more potential in markets that have already experienced bear markets, and are rallying off lows.

Most recently, technical indicators had been on a sell signal for the VanGuard Emerging Markets etf, since its peak early this year. In its tumble from that peak it fell 18% to its summer lows.

However, it found solid trendline support again. Our technical indicators triggered a new intermediate-term buy signal. And it launched into a new rally.

The etf has since broken back above its 20-week m.a., which was previous overhead resistance, and which is now likely to be downside support on any pullbacks for a while.

Our initial upside target is 46, the level of its last two rally peaks. But if it can break above those, next resistance should be at its 2011 high.

The current dividend yield is 3.36%, and the fund has a low expense ratio of just 0.18%. Meanwhile, it is selling at a P/E ratio of only 12, compared to the S&P 500’s P/E Ratio of 19.

VWO is a large fund, with 1.2 billion shares outstanding, and a market cap of $50 billion. It is widely diversified. Its twenty largest holdings are only 21.7% of its total holdings.

Those largest holdings include Taiwan Semi-Conductor, Petroloeo Brasileiro (Brazil), China Mobile, China Construction Bank, CNOOK (China Offshore Drilling), Gazprom OAO (Russia), America Movil (Mexico), Mtn Group (South Africa), Sasol Ltd (South Africa), Hon Hai Precision (Taiwan), and Infosys (India).

The new expectations that the Fed will not begin tapering until sometime next year should provide a further tailwind for emerging markets, as should any agreement to temporarily end the government shutdown and raise the debt ceiling.

Other emerging market etf’s on which we have similar buy signals include the SPDR Emerging Markets etf, symbol GMM, and the SPDR Emerging MidEast/Africa etf, symbol GAF.

In the interest of full disclosure, my newsletter and subscribers have positions in the VanGuard Emerging Markets etf, symbol VWO.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules