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Martin Pring's InterMarket Review - International Markets (Mar 2013)

Us vs The Rest of the World

Previous joint trendline breaks between the Special K and the ratio of the S&P ETF to the rest of the world have offered reliable signals of trend reversals in both directions. The price has violated a 7-month down trendline but the SPK has yet to follow suite. At this point, it looks like a counter-cyclical rally, but with the Dollar Index threatening to complete a massive base, this relationship needs watching carefully.

Europe

Often, initial sign of technical weakness is a failed breakout. This is apparent from the recent relative action of the Europe 350 ETF, which has also violated an up rendline. The price itself is still maintaining its breakout, but a move below $36 would render that trend negative as well.

Asia Ex Japan

The Japanese ETF, the EWJ, has just experienced a double trendline break for absolute and relative action. Since these lines are quite long, the breaks, if they hold, will turn out to be signifi cant. The only weak point on the chart is the failure, so far, for the relative KST to go positive. Since the RS trendline break implies sideways or higher relative action, we are expecting the KST to soon revert to a positive mode.

Japan

Last month saw an upside breakout from the Japanese ETF, the EWJ, which has succeeded in violating two trendlines. While we are expecting higher prices, we would be more comfortable in that view if both KSTs, which are currently straddling bullish territory, could experience a stronger reversal to the upside.

Emerging Markets

The Emerging Markets ETF (EEM), is struggling. The RS line, for instance, recently experienced a false upside breakout and the KST for relative action was never able to go bullish. The bull market trendline for the absolute price is around $41.

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