#3: Emerging-Market Stocks
Click to Enlarge EM stocks tend to be the leaders of any new market trend given their sensitivity to changes in the health of the global economy. They are vulnerable to shifts in both trade volume and commodity prices. So they act as an early warning system if all’s not right.
So it’s worth noting that the iShares Emerging Markets (EEM) is in free fall and has already fallen below its 200-day moving average for the first time since May.
Back then, as the EEM fell apart in late May, the Dow didn’t succumb to the selling pressure until late June.
For this reason, I continue to recommend clients look for opportunities on the short side via picks like the UltraShort Emerging Markets (EEV), up 10% since I added it to my Edge Letter Sample Portfolio on November 4. My short against Tesla Motors (TSLA) is up 17% since Oct. 29.
Disclosure: Anthony has recommended EEV long and TSLA short to his clients.