China Rally Continues


Headlines remain pretty quiet about emerging markets. There is still plenty of chat from the commentariat about why China’s economy is or isn’t still in dire straits or why Putin’s Russia can or can’t catch a break from Western businesses. But the mix of positive and negative doesn’t seem to have changed much.

And at this point, no news is just fine with us. It’s possible that this low-volume calm will continue until the market wakes up again in 2016.

The iShares MSCI Emerging Markets ETF (EEM) has bounced back from the terrible week that began on December 7. EEM has now been up or flat for six of the last eight trading sessions and has made contact with its 25-day moving average. EEM found support at 31 earlier this month, which was also support in late September and closed where it closed on August 24 at the low point of the August meltdown.

It’s also a positive that PowerShares Golden Dragon (PGJ) is continuing the rally that began in late September. PGJ is riding its 25-day moving average higher, and a dip to that average in November and again in December resulted in a bounce higher. That’s a welcome sign of strength from the biggest emerging market and speaks well for prospects in 2016.

The major indexes were fairly flat heading into today’s early close for the Christmas holiday. At 11 a.m., the Dow was down 39 points (-0.2%), the S&P 500 down 3 points (-0.1%), and the Nasdaq higher by 6 points (0.1%). The iShares MSCI Emerging Markets ETF (EEM) fell nine cents (0.3%).

This is an excerpt from Cabot Emerging Markets Investor, which seeks to capitalize on the enormous potential in emerging market countries. Chief Analyst Paul Goodwin has been a researcher and writer for over 30 years and a member of the Cabot investment team since 2005.

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