Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

© 2005-2022 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