Both Transports and Emerging Markets are Diverging – Cause for Worry?

Lost in the “ever upward” rally have been many emerging markets (I used a general market instrument below, but markets like India are already down 10% year to date), and lately transports.  Hence we have an interesting divergence as the general indexes go one way but markets that supposedly are the global hot spots show relative weakness, along with transports which of course ship into those markets… and domestically.  Both indexes below not only are not joining the broader indexes in making new highs but have fallen to a key longer term support level, the 50 day moving average.

To be ignored (as every other warning shot the past 5 months has been?), or canary in the coal mine?  In a normal market I’d say they are to be paid attention to – but no other traditional warning signal the past few months has mattered, so we’ll know better in 4-8 weeks if these signals matter in The Bernank market.

Disclosure: No position

About Mark Hanna 542 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

Follow Mark on Twitter @fundmyfund.

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