I was looking at the BRICS (Brazil Russia India China South Africa) and thought the charts instructive…
First up is a 4 year weekly chart. It captures the “heyday” of the Pop, before the plunge. Then the rise out of it and the “go flat / down” after.
I’ve listed the Indian Rupee fund in the ticker list below, but not put it on the graph, as we’re limited to 10 tickers max and it is basically flat against the dollar over the 4 years (with a dip of 20% during the sell off and a 5% ‘gain’ in the last 6 months).
What do we see?
First up “they all go together when they go”. Currencies are driven by the selling pressures and move with their general markets. The markets are, by and large, driven together by the same events. We also see that the BRICS tended to spike together to great heights, have a very deep drop (more volatile than the SPY) and then have a fast recovery to a ‘flat phase’.
During that “flat” the SPY continued to rise. (RSX also has some rise then, on oil prices largely IMHO)
But all the lines are flat to down “lately”… There’s been “no joy” in BRICS land for a while now. So how about we “zoom in”?
FXI - China CYN - China Yuan currency SPY - S&P 500 benchmark ETF EWZ - Brazil ETF BZF - Brazilian Real currency RSX - Russia ETF (heavy in oils) XRU - Russian Ruble currency INP - MSCI India Fund ETF INR - Indian Rupee (not graphed as net near zero EZA - South Africa ETF SZR - South African Rand currency
And, with the same list, the one year daily chart:
We’ve basically been ‘down to flat’ in just about everything from that peak in about November of last year. Since then, only SPY has really had any run (and it ran out of gas in Feb-April) while South Africa has “held up” (and lord only knows why… likely the gold and diamond mining – Oddly, their largest holding is “Vail Resorts” ticker MTN per Yahoo Finance…)
You can look through the indicators and they say about the same thing. Little trend, what there is, is down. Basically, you have nice volatility spikes that you can ‘range trade’ (buy the dips, sell the rips) in some of the tickers; but mostly it’s just “keep on staying out”…
So, if the SPY has ‘caught up’ with the BRICS on the 4 year chart, and everything has “gone flat”, and the economy is looking like a sputtering lawnmower about to choke on tall grass, what to do?
I think this goes a long way to explaining the recent bumps in bonds and some metals. “Duck and cover”. It also suggests that “momentum” stocks (individual issues) will be more important than any broad baskets. So I’ll be adding a “Mo’ Mo!” section to the WSW postings.
But, at least for now, it’s nice to know that we can ‘Pay no attention to those BRICS, they are not the ones you are looking for…”
Maybe someday they will be again, but for now, not so much. Most interesting is simply the rise of BZF, the Brazilian currency, as their stock market does not rise. I suspect someone is buying land in Brazil and / or commodities, using $US Dollars. Most likely China.