By Tim Seymour
Emerging markets vs. domestic markets could be "game on" if the chart can recover in a big way. That could happen if we respond to the Federal Reserve and European Central Bank meetings this week the way emerging markets did in the epic first week of September 2012. That was the week when both central banks ratcheted up the game of Quantitative Easing Infinity. This week, the European Central Bank said all it could say on accommodative policy.
Look at the yields in European Union sovereigns hitting record lows. Emerging markets outperformed domestic markets from that point into Jan. 2 by 13%. All the ingredients are there again, and stocks -- especially materials -- are more oversold. Investors are picking over the underperformers and rotating right now.