September 30, 2015
Trades & Tutorials
By Geoff Bysshe
When will U.S. stocks stop going down?
Clearly the momentum in stocks is down, but it’s also important to recognize that the bearish momentum in equities is not just in the U.S. For this reason, we should look beyond just the U.S. markets to help anticipate any potential significant change in the trend for stocks. It’s not hard to do with ETFs, and as you’ll see, it’s a good confirming indicator.
In this video I demonstrate how the emerging markets as represented by the ETF, EEM, can be used to help confirm a major trend turning points and continuations in U.S. stocks.
There is a fundamental argument that the economies of the emerging markets are even more fragile and susceptible to changes in interest rate trends and global growth, and therefore, they may lead global equity trends up or down when these factors are the prevailing theme as they are right now.
However, the economic linkages between countries is only part of the reason the markets may be correlated the way that I demonstrate in the video. The other reason is investor sentiment. And right now, sentiment is a major driving force in the short and intermediate term trends in the markets. So don’t ignore the insights you can gain from watching the EEM as demonstrated in the video
