Note on links to FT articles

I have been told by a few readers that the links to some of the FT articles I have suggested are taking them to subscription pages. One potential way round this is to click on the link I have provided and then copy and paste the title of the FT story into a fresh google search and then look for the FT article amongst the search results (should be in the first 5 or six). 50% of the time you get to the article you wanted originally but without the subscription garbage. Hope this helps some of you.

Developed versus emerging markets - Can we learn anything from their relative movement?

Above you can see three charts all in the one frame. The orientation of the data is as follows, starting from the bottom we have the Morgan Stanley Emerging markets index, above that the World index from the same provider, and right at the top we have the ratio of the two, calculated by dividing the value of the emerging markets index by the world index (developed markets).

As the ratio rises this is showing you that emerging markets are outperforming developed markets and this has been the case since the end of October last year when the emerging market index bottomed. Note that the world index made a fresh low after October, in March which was not matched by the emerging world. Conversely when the ratio falls the opposite is true. In that case developed markets will outperform.

Although I appreciate there is not a lot of history we can see that when the ratio hit these levels last year it marked a high point for equities and the end of the outperformance of the emerging markets. Given my view on some emerging markets and India in particular I think that we could see outperformance again in developed markets. I feel that the S&P must at the very least test the low that was made in March, be it a 50%/60% or greater retracement. If that is the case emerging markets are not the place to be in the short run.

I would like to stress that I am a long term bull on the Indian markets in general, but feel that we have gone a long way in a short while on essentially hot air as per my recent posts.

The Coppock Indicator - A great article

I'm sorry about the lack of original ideas at the moment part of it is down to me waiting for a resolution to the S&P 500. Along those lines take a look here at a letter from the FT today. I've been reading a lot about talk of this indicator recently and found this letter highly relevant.

will update more at the weekend.

A good article on where we are economically from a global perspective.

Another one from Ambrose Evans-Pritchard at the Telegraph: Take a look.

OMX, Swedens stock market - Weekly structure suggests further downleg

Continuing from my post below about the USD index, I feel that the OMX cash index has a very clear bearish structure which will only be broken on a rise over the 801.54-816.35 region. However, while below this area there is a large probability that we make a fresh low below 556.77. This also offers a clear trading opportunity with a great risk reward profile. I would suggest selling at market or on pullbacks under the above mentioned region. Your stop is clear (over 801.54-816.35), and the initial target is 556.77. Good luck!

USD Index - Has it bottomed?

The USD index has bounced from close to the 61.8% retrace of the prior rise. Could this possibly be a turning point for the Index. If so it could also mark a turning point for equity markets as the USD being bid will probably be associated with stress in risk markets.

My own view given positioning in USD shorts is that we are close to a turning point. For the purposes of this blog I am simply pointing out that, as before, the USD index may be key to direction elsewhere.

Richard Koo - FT today

Great article from Richard Koo in the FT today. He sums up what I have been discussing in a couple of recent posts about what a waste of time S&P is in the medium term (http://you-buy-the-high-i-sell-the-low.blogspot.com/2009/05/if-s-had-rating-it-would-be-junk.html). Check it out:

http://www.ft.com/cms/s/0/c3654cdc-4f88-11de-a692-00144feabdc0.html

GBPAUD - Divergence implies strength ahead

As can be seen from the weekly GBPAUD chart above there is a rather large weekly bullish divergence. Given the over extended nature of the recent bounce back in AUD, I think this trade can be justified. I also see a volatility breakout on the horizon and given the divergence set up I favour a push higher. Move could be fast brace yourself.

AUDNZD - Opportunistic trade recommendation

Just been looking at the AUDNZD chart and would suggest buying on pullbacks towards 1.2400 with a stop under 1.2300 and a target back at 1.2940. Good risk reward and great fundamentally and technically. NZDUSD may have also completed a symmetric correction. Perhaps more on that tomorrow. Goodnight!

Interesting - Yield curve spread and equities

Good piece on The Big Picture that ties in with my piece yesterday about the rise in 10 year yields and the movement of equities. Take a look:

http://www.ritholtz.com/blog/2009/06/relationship-between-the-210-spx/