From the end of the Goldilocks Era in mid-2007 to the depths of the worldwide economic crisis in late 2008 and early 2009 and onward through the ensuing global recovery up to now, “overall” emerging stock marketplaces and commodities “in general” generally have traveled together. The emerging stock marketplace and commodities domains have been in a sideways to bearish trend since their spring 2011 peaks. In the wake of Federal Reserve Board tapering talk, they established interim lows in late June 2013. Yet despite the notable rally since then, in recent weeks they probably have resumed their interrelated downtrends. These bear moves probably will continue. Within the commodities realm, the tumble of the petroleum complex is especially noteworthy.
The bull and bear adventures and timing relationships between emerging stocks and the broad GSCI are not perfect. However, in recent years they have been rather close. Since the peaks in spring 2011, note the pattern of lower and lower highs as the downtrends have proceeded.
Petroleum constitutes an important part of the broad GSCI and many other commodity indices. The petroleum story and its supply/demand situation are important components for the emerging marketplace growth theme. However, note the late summer 2013 reversal of the petroleum bull move that began around a late June 2013 take-off point. In addition, the overall worldwide petroleum situation is bearish. Weakness in various corners of the oil marketplace in recent weeks suggests that commodities “in general” probably will continue to venture lower over the next few months. So what does the historically close association between trends in emerging stock marketplaces and commodities in general suggest? The renewed bear trend in petroleum since late summer 2013 indicates that the MXEF will continue to drift lower as well.
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Still Heading Down- Emerging Stock Marketplaces and Commodities (10-7-13)
Chart- Emerging Stock Marketplaces (for essay, Still Heading Down- Emerging Stock Marketplaces and Commodities) (10-7-13)