In today’s relatively boring price action we note that the Emerging Markets ETF (EEM US) is green while the SPY is red. We suggested the Emerging Markets space was at interesting levels for a long play relative to the S&P 500.

The chart below shows the SPX (orange) versus EEM (white).

One day reversal in the spread won’t make a new trend, but the relative move today is the biggest in a while.

Key resistance for the EEM is at 44 USD. The negative trend is still intact, but the space is showing some sign of life, at least relatively speaking.

Nobody has missed the fact the Yuan has gone one way lately. Interesting to note is the big intraday reversal today. We saw the same intraday reversal in the Yuan back in early 2016. That candle was followed by a rather big retracement in the Yuan.

The Yuan intraday reversal in early 2016 and the following move in the FX, was accompanied with an almost 25% gain for the EEM.

Be sure to watch the Yuan carefully here…

Source: charts by Bloomberg