Emerging markets vs. domestic market... time to wax back on?
[caption align="alignright" caption="Workers labor to produce canned tangerines to be exported at the Huangyan No 1 Canned Food Factory in Huangyan, eastern China's Zhejiang province."] [/caption]
Looking at the attached chart we have been updating for months, we are at key pullback level of the 20-day moving average. We cautioned that the recent move was powerful to the point that profit taking was prudent.
With the pullback it's time to take a look at re-engaging the position a bit. U.S. earnings season will be challenging on the bottom line with the lowest estimates for quarterly earnings per share (EPS) since 2009 and top line waiting for confirmation of demand.
Meanwhile China continues to print solid to strong manufacturing results. Inflation is subdued but we are seeing resurgence in spot commodity prices - all this bakes up well for emerging markets.
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