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As of Wednesday, equity fund flows into emerging markets have stayed positive in 10 consecutive weeks.

Going back 10 years, this historically correlates with at least a short-term correction in emerging market stocks,

said a report by US Global Investors – Weekly Investor Alert.

Click to enlarge:

Source: US Global Investors – Weekly Investor Alert, April 23, 2010.

Emerging stock markets were the first to turn the corner after the credit crisis sell-off – a full four months before the majority of indices bottomed in March 2009 – and is being watched closely to ascertain whether this market would be the first to spell danger for global stocks. Will the underperformance of emerging markets versus mature markets during April turn out to be the proverbial canary in the coalmine?

Source: Flow of Funds Indicate Overbought Emerging Markets