Emerging markets are knifing lower once again, today. And the EEM is now below its lower daily chart Bollinger Band after clearly underperforming the developed markets for all of 2013.
Going forward, the issue is whether we are looking at selling exhaustion today, indicating we are perhaps close to a rotation down into these emerging economies–namely Brazil, Russia, India, China (or BRIC). Of those markets, the Brazilian/South American plays have become most intriguing to me. For what it is worth, we know Rio is hosting not only the 2014 FIFA World Cup, but also the 2016 Summer Olympics.
Perhaps of far more significance, though, is that the Amazon/Ebay of South America, MELI, is withstanding the emerging market onslaught today exceptionally well, as you can see on the first daily chart below.
Furthermore, Brazilian energy giant Petrobras has been decimated for years on end, the quintessential disappointing laggard for which many had high hopes. However, PBR is not giving back its recent attempt at a bottom, even with today’s mess in the emerging markets at-large.
I am keying off these two plays going forward for signs of them being beneficiaries of capital rotations.
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adding to edz is like a daily event for me now