— Ian McMillan, CMT (@the_chart_life) January 12, 2022
Today’s Chart of the Day was shared by Ian McMillan (@the_chart_life). It’s a relative strength chart of Emerging Markets vs. the S&P 500 over the past year and a half ($EEM/$SPX). Emerging Markets underperformed US stocks by a wide margin in 2021. $EEM lost more than 3% while the S&P 500 gained about 27%. However, things are off to a much different start in 2022. $EEM has outperformed the S&P in 7 of the 8 trading days so far this year, by a margin of about 5%. Ian points out that $EEM is currently testing a well-defined downtrend line that has been in place for nearly a year now. If $EEM can break out of this relative downtrend, it would be a big improvement for this unloved asset class.