Emerging Markets and China are no Safe Havens

8/14/2019 Emerging Markets and China are no Safe Havens

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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.ValuEngine is a fundamentally-based quant research firm in Princeton, NJ. ValuEngine

covers over 5,000 stocks every day.

A variety of newsletters and portfolios containing Suttmeier's detailed research, stock picks,and commentary can be found HERE.

Suttmeier's Four in Four video and ForexTV Markets Review can be watched on the webHERE.

December 22, 2009 Emerging Markets and China are no Safe Havens

Be careful about investing in Emerging Markets including China. Higher bond yields make nineof eleven sectors Overvalued. Home builders are against the Senate Democrats and their HealthCare Bill. The weekly charts for Gold, Crude Oil, the Euro, and the Dow

Dont listen to the advice to invest in Emerging Markets

All I have been hearing from strategists is advice to invest in emerging markets including China. Theysay that developing countries will lead the US economic and the global recovery. I disagree.

The iShares Emerging Markets Index Fund (EEM) has a negative daily chart. This weeks support is$39.90 with the 50-day and 21-day simple moving averages at $40.66 and $41.12. The weekly chart forEEM shifts to negative this week with a close below the five-week modified moving average at $40.32.This would target annual support is $36.14. Investors should bring the cash home to the stronger dollar.


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The iShares China 25 Fund (FXI) has a weaker daily chart than EEM. This ETF is below its weeklypivot at $42.50 and well below the 21-day and 50-day simple moving averages, which are crossing intonegative territory at $43.81 and $44.00. The weekly chart stays negative on a weekly close below thefive-week modified moving average at $42.88. The 200-week simple moving average is at $38.21.

Yesterday a Chinese official said that their demand for US Treasuries will suffer as the US buys fewer

Chinese good. That sounds like an economic warning for China.

The yield on the 30-Year Bond is at the highest level since August 10th. Note that declines in yieldsfailed at the 200-day simple moving average as resistance in early-October and on November 27 th andthis resistance is now 4.21. My semiannual support is 4.75, which puts a drag on equity valuations.


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This morning nine of eleven sectors are Overvalued according to ValuEngine which has been awarning that stocks will see limited upside relative to downside from current levels.

The most overvalued sectors are Basic Industries and Energy, which are vulnerable to a strongerdollar. The cheapest sector is Healthcare, which is under the cloud of Healthcare Reform.

The NAHB says Senate Health Care Bill will Threaten Home Building

The National Association of Home Builders say that a last-minute provision in the Senate DemocratsHealth Care Bill targets the construction industry and is certain to derail the fragile housing recovery.The bill mandates that small construction industry firms with more than five workers provide health care

for employees. The NAHB says that this threatens the solvency of the countless small home builders.

All other small businesses are exempt from the requirement to provide health coverage if they employ50 workers of less. The NAHB wants the Senate to pull this unprecedented assault on theconstruction industry, which is trying to stay in business during the worst housing downturn since theGreat Depression. The NAHB calls the Senate Health Care Bill a true jobs killer for small homebuilders.


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The weekly charts for Gold, Crude Oil, the Euro and the Dow

Gold shifts to negative on its weekly chart with a close this week below $1107 as the bubble pops.

Crude oil stays negative on its weekly chart with a close this week below the 200-week at $75.79.


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The euro will stay negative and appears headed for a test of its 200-week at 1.38 in January. As I havebeen saying the economic problems in Europe appear worse than in the US. I wonder how manyemerging market countries have diversified some assets from the dollar to the euro.

The Dow remains poised for a breakout above the down trend that goes back to October 2007.

Ascending Wedge support is 10,211 with the down trend and weekly resistances at 10,475, and10,506.


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Send me your comments and questions to [email protected]. For more information on ourproducts and services visit www.ValuEngine.comThats todays Four in Four. Have a great day.

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Richard SuttmeierChief Market Strategistwww.ValuEngine.com(800) 381-5576

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. Ihave daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters as

well as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as theValuTrader Model Portfolio newsletter. I hope that you will go to www.ValuEngine.com and review some of the sampleissues of my research.

I Hold No Positions in the Stocks I Cover.

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Emerging Markets and China are no Safe Havens