Peter Lee, Chief Technical Strategist at UBS in New York, looks at the relative performance of US, Japanese, Emerging Market and European equities.
Lee says that US equities should continue to outperform emerging markets as long as the S&P stays above the top of its uptrend channel. Nonetheless, he notes that emerging markets and Japanese equities appear to be stabilizing in recent months. He points out that the Nikkei 225 is approaching crucial resistance along the top of its January 2014 downtrend and MSCI Emerging Markets is also testing pivotal support.
Meanwhile, European Equities (EMU) continue to deteriorate – Lee says the breakdown of its 2-year uptrend in July 2014 and the subsequent rally that failed to get it back on trend reaffirms this underperformance.