WHY EMERGING MARKETS ARE OUT OF FAVOUR?

Emerging markets have been out of favor for some time now with a well defined resistance at higher end. 2014 has not started well and in just few days, the emerging market ETF is down 5%

There are two popular Emerging market ETF: 1. the Vanguard FTSE Emerging Markets ETF (VWO) and the 2. iShares MSCI Emerging Markets ETF (EEM). Let us look at EEM
Here’s the Chart of EEM

As you can see in the chart above, EEM has been trading between 36 and 45 for two years now. Remember, everyone chases performance and right now considering how lackluster emerging markets are performing – there is not much excitement. As per recent data, investors have pulled out $11.5 billion from emerging markets in the fourth quarter of CY2013. On other hand, they have poured almost $116 billion into developed markets funds during same time
Here’s what one should do:
Keep an eye on EEM for decline to 36 (expect support there) and expect momentum above 45.