The key standout in this chart is the index dropping to that lower uptrend line within its longer-term uptrend channel. This has been a key zone for the index to find support in recent years, but it also serves as a risk trigger in that a breach of that line will open up the prospect of further downside.

Meanwhile, the breadth indicator is showing widespread weakness across emerging markets, which along with macro headwinds and the downdrafts in EMFX could well tip the odds in favor of a further push to the downside in the headline index.

While the breadth indicator is close to levels most would consider “oversold”, a more powerful signal would be if it dropped to zero and then turned back up. So while this chart carries some cause for optimism (we are clearly well progressed in the EM bear market), the main message remains one of caution and patience.

Specifically, I will be looking for improved technicals (not yet), more compelling valuations (not yet), more fulsome washout in sentiment (not quite), and a shift in the macro currents (also not yet). So be sure to follow for updates on all of this!

Key point: EM equity technicals suggest caution and patience for now.

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