Equity markets around the world are bouncing this week. Is time to ring the risk-on bell again? No, not yet. Despite a wide run of recoveries, the trend reversal (if in fact that’s what it is) is in its early stages — too early to inspire confidence that an extended run higher is brewing.
But if and when the outlook looks more promising on a country-fund basis in the days and weeks ahead, the short list of encouraging possibilities may include Netherlands (EWN), Indonesia (EIDO) and Israel (EIS), among others. The common denominator for inclusion on the short list to monitor: scoring relatively high for our proprietary Signal score, per the table below, which is ranked by 5-day performance. (For details on the trend-scoring methodology below, see this summary.)
To be clear, the -1 Score — the highest at the moment — is a relatively weak profile, albeit mildly so vs. the lower Scores. Bottom line: it’s premature to make high-confidence forecasts that this group is about to run hot. In fact, the downtrend that’s been weighing on equity markets around the world still appears to have the upper hand on a trend basis. That said, there are some intriguing changes in recent days—changes that may be an early clue of things to come.
But these are still early days. Meantime, we’re keeping a close eye on a few possible turnaround plays. As an example of how several of the stronger markets look at the moment, consider iShares Indonesia ETF (EIDO). Is the dramatic bounce this week a sign of things to come? Unclear, but the bounce has caught our attention.
The same can be said of iShares Israel ETF (EIS).
And for US stocks too via SPDR S&P 500 (SPY)
Put us down as skeptical that the global downtrend in equities has run out of road, but our skepticism is starting to ebb, ever so slightly, for a select batch of country funds. ■