Emerging Markets vs US: The Ratio Reaches Levels Not Seen in Months
The S&P 500 to Emerging Markets ratio (SPY/EEM) has fallen to 11.53, positioning nearly 3 standard deviations below its annual mean (z-score: -2.70). The ratio’s RSI has dropped to 21.9 — deep oversold territory.
In practical terms: Emerging Markets are outperforming the US market with an intensity that statistically occurs rarely. Over the past 20 days, the ratio lost 8.4%; over 60 days, 7.1%. Such rapid compression deserves attention.
Historical data shows that when the ratio reaches these extreme levels, it rose in 78% of cases the following month. But statistics aren’t destiny, and current conditions might justify a new equilibrium.
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