Helping Self-Directed Investors Succeed Blog - Is Bounce In These Emerging Market ETFS Signaling A Bottom as of Nov 23rd, 2018

Is Bounce In These Emerging Market ETFS Signaling A Bottom as of Nov 23rd, 2018

November 23rd, 2018

The first official 2018 Holiday season week for US Markets did not end in a very positive fashion. As shoppers flooded retail stores trying to snatch all the Black Friday bargains they could lay their hands on, investors apparently weren't showing so much interest in the many US Stocks and ETFS that have been handed severe losses over this month.

The S&P 500 Tracking ETF - SPY finished the week closing lower for the week and also for the year. SPY is now down -1.35% year-to-date. In November, the ETF has dropped -2.72%. The NASDAQ Composite Tracking ETF - ONEQ is down -4.78%. Year-to-date it is holding on to a slender +0.59% gain.

Investors did indeed cast their nets wider in November fishing for international stocks that were heavily dumped over this year. For instance, the iShares MSCI Indonesia ETF - EIDO gained a stunning +9.81%. The iShares MSCI Turkey ETF - TUR jumped +8.44%. The iShares MSCI South Africa ETF - EZA shot higher by +7.44%. The iShares S&P India Nifty 50 Index Fund - INDY moved higher by +6.51%.

These gains are extraordinary considering the current situation the broader market is in and self-directed investors should be aware of this. In fact these gains are so tempting that many want to jump on these.

From our vantage point, we would like to exercise caution before wading in this pool. Emerging Markets broadly have been displaying considerable weakness over these years and in the past few occasions bounces turned out to be "dead-cat" in nature.

Undoubtedly, self-directed investors will need to keep track of these ETFS but before jumping head-on they will need to consider two main factors. The Fed's decision and outlook on interest rates and Crude Oil prices which have been in a slump.

The Fed had indicated earlier that they were on track to hike interest rates in the December meeting and even if the Fed follows-through on this, their outlook on rates becomes an important factor to consider. Emerging markets can become attractive if the Fed indicates a pause for sometime. If Crude Oil continues to slide, many emerging markets that are dependent on oil heavily can benefit.

We believe it might be too soon to call a bottom in these markets. But these gains are indeed pointing to something to keep an eye on.

Good Luck and Happy Investing!

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