Monday, May 15, 2017

Chart Talk {05.15.17}

There's been a lot of chatter the past week or so on investing overseas.  We talked about this as well last week here.   I thought today I'd show you one other consideration.  Below are two charts but these are different than the ones we usually post here.  These charts compare to securities against each other and show which is doing better on a performance basis.  The two charts I'm showing today pit the iShares Emerging Market ETF vs the S&P 500 and the one below that shows the iShares Europe, Australia, Far East ETF again vs the S&P 500.  Charts are generated via Tradingview.com and you can double-click on them to make them larger.  These are weekly charts so we can get a better representation of scale.


In both of these charts you can see the charts have been in downward trending patterns, putting in a series of lower lows and lower highs going back years now.  In these comparison charts that is indicative of the fact that the S&P 500 has massively out-performed foreign markets now for many years.  That started changing last year when both of these ratio charts quit going down.  Both have now spent months putting in basing patterns and have finally broken through downward sloping multi-year trend lines {shown as that green downward sloping line on the charts}.  


That sort of divergence is the type of thing that investors who follow money flows pay attention to, particularly after years in which one group has taken it on the chin and is now showing signs of life.  Now nothing in these charts says that these indices couldn't rollover again and the evidence is early on out-performance longer term.  Also these could do better than the S&P 500 and still go down if markets around the world went into a decline.  All these would tell you is that their decline would be less than the markets if things fall apart. These are simply another way to weigh the evidence on where money may be flowing in the future.   

Right now money is flowing into international stocks and these comparison charts show you the evidence of that.

I will be posting Tuesday and Wednesday this week as I will then be traveling to my daughters graduation from college.  I'll be back sometime early next week.  I don't know yet whether that will be Monday or Tuesday.

Nothing in this column should be considered investment advice.  Investors should do their own homework and/or discuss all investments discussed in this or any post from our firm with their advisors before making any decisions.  Investors should carefully weigh the risks versus their own unique investment profiles before making any investment decisions.  Better yet, just hire us!  

Also please note that Lumen Capital Management has made investment in certain foreign related ETFs on behalf of its clients and in personal accounts in the past month.  We reserve the right to change these investments without notice on this blog or via any other form of verbal, written or electronic communication.  
Long ETFs related to the S&P 500 and certain foreign ETFs  in both client and personal accounts.  These positions can change at anytime without notice.