International Equity Market Snapshot

Below we provide our unique trading range charts for 21 major country indices. For each index, the light blue shading represents between one standard deviation above and below the 50-day moving average. When the price is within this trading range, it is considered to be in "neutral" territory. The red zone represents between one and two standard deviations above the index's 50-day moving average. Moves into or above the red zone are considered "overbought." Moves into the green zone (more than one standard deviation below the 50-DMA) are considered "oversold."

With the exception of a few Asian countries, most indices shown below are trading into overbought territory. China's Shanghai Composite is the only index trading below its 50-day moving average. Australia, Brazil, South Korea, Taiwan, the UK, and the US look to be the most overbought of the bunch. After trading in perpetual downtrends for nearly all of 2008 and the first few months of 2009, most countries have now been trading in solid uptrends for five months now, with only a brief pullback here and there. Brazil, China, Hong Kong, India, Malaysia, Mexico, Singapore, Sweden, Spain, South Korea, and Taiwan have all taken out their 52-week highs in recent months, while the rest still have a bit further to go.

click to enlarge

Comments

[Mad Hedge F...:]

ytb A number of readers have asked me to come up with a safe, high yielding investment in which to hide out in case the equity markets swoon again. That means they are looking for a security that offers a high fixed return, denominated in a strong currency that will benefit from future upgrades that will boost the principal over time. All of that is another name for the Invesco PowerShares Emerging Market Sovereign Debt ETF (PCY). The fund has 40% of its assets in bonds issued in Latin America and 31% in Asia, with the bulk of the maturities exceeding ten years. The two year old fund now boasts $340 million in market cap and pays a handy 6.42% dividend. This beats the daylights out of the nine basis points you currently earn for cash, the 3.40% yield on 10 year Treasuries, and still exceeds the 6.42% dividend on the iShares Investment Grade Bond ETN (LQD), which buys predominantly single “A” US corporates. The big difference here is that foreign bonds are issued in strong foreign currencies instead of weak dollars, and have a rosy future of further credit upgrades to look forward to. It turns out that many emerging markets have little or no debt because until recently, investors thought their credit quality was too poor. No doubt a history of defaults in Brazil and Argentina in the seventies and eighties is at the back of their minds. With US government bond issuance going through the roof, the shoe is now on the other foot. A price appreciation of 125% over the past year tells you this is not exactly an undiscovered concept. Still, it is something to keep on your “buy on dips” list.

Sep 21 11:29 PM

[tinscale:]

PCY invests in U.S. dollar-denominated government bonds.

Sep 22 08:39 AM

[Earthizen:]

Doesn't it appear strange that the most manipulated market - China is the only market that has had a sizable correction in this rally? Maybe the communist government knows a thing or two about bubbles and how not to let them get out of hand? More than their democratically elected counterparts? Maybe this is why socialism is taking hold in the good old USA?

Sep 22 10:17 AM