US equity markets are indicated lower at the open as Europe tries to recover from morning selling. The USD is down for the third day in four, energy markets are edging higher, and precious metals are also trading green. Rates markets are generally trading higher in price, but yield moves are fractional, less than 1 basis point across the curve.

Yesterday, we highlighted the fact that despite the rally last week, the S&P 500 had not yet broken its string of lower highs and that until then caution was warranted. Well, if you are looking for an example of why it often pays to wait for a market to break a downtrend before starting to go long, look no further than emerging markets.

The chart below shows the performance of the MSCI Emerging Markets ETF (EEM) over the last year. Since its peak earlier this year, EEM has had no fewer than seven rally attempts.

While each one of these rallies may have seemed like a significant bounce at the time, up until this point, every single one of them has failed right at or around the 50-day moving average, establishing a lower high.