A Personal Finance and Investment Arm of The Business Times


International Market by Martin Pring’s InterMarket Review (June 2013)

U.S. Stock Market

Our Stock Barometer remains at a maximum bullish 100% reading and based on their current trajectories, most of its components are unlikely to go bearish for a while. That’s also the message being given by our Total Return Model in the lower window of Chart 14 since it is currently a long way from a negative zero crossover. Our problem is that these are usually lagging indicators and that the current intermediate term structure reveals a vulnerable market. If our suspicion of a probable contained intermediate decline is correct, then these indicators will remain bullish and permit a subsequent rally to new highs. On the other hand, if the correction is a serious one, then it would have the potential to trigger some primary bear market signals. In that event, indicators such as the KST for infl ation adjusted equities(Chart 15) would roll over and start to violate some important up trendlines.

International Markets

US vs. The Rest of the World

The ratio between the S&P ETF, the SPY, and that for the Europe Australia Fare East (EFA) appears to be moving back in favor of the US. That view is based on the fact that the 2012/13 down trendline for the Special K relationship has just been violated on the upside and has been supported by the positive action of the daily KST in the bottom panel of Chart 35. The ratio itself has just completed a reverse head and shoulders pattern. That action is perfectly consistent with a higher US Dollar Index where Chart 36 shows that the path of the Index, the ratio and the (inverted) International Inflation Protected Bond, the WIP, all tend to move in tandem. That observation probably means that non US markets will face headwinds in the months ahead.


So far the European ETF, the IEV, is acting better as both KSTs are in a rising mode and the absolute price remains above its 65-week EMA.

Emerging Markets

The real standout is the performance of emerging and BRIC countries, (Charts 38 to 40)which, for the most part, look as though they might be on the edge of a cliff. Sometimes markets look as though they are extremely vulnerable and pull back from the brink, as was the case for Japan a few months ago. The result is often an explosive advance, as was the case then. On the other hand, falling off the cliff is usually followed by a nasty decline. Since very few of these markets have yet broken down, we must be careful in drawing too negative

a conclusion. All we can say at this point is that their technical position looks somewhat precarious.This can be seen initially from the top window in Chart 40, which shows the big picture for the Emerging Market ETF and the multi-year support trendline that lies just above $38.

To read more, please download the PDF here.