Overtime

Foreign equities

Good morning,

This week we’re taking foreign equities into Overtime and providing a technical overview of the current landscape. Contrary to popular belief, the US isn’t the only game in town, and we featured a powerful breakout for the German DAX in yesterday’s Monday Morning Playbook.

But, as US-benchmarked investors, are the relative trends strong enough to support out-of-benchmark exposure?

Let’s find out.

Today we’ll look at:

• Technicals for broad EAFE and emerging markets

• Key countries and sub-regions

• Just how impactful currency movements can be

• and 3 countries with bullish trends relative to the S&P 500

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Broad Regions

EFA: MSCI EAFE ETF

Foreign developed markets have lagged the S&P 500 significantly in 2023, but are showing signs of stabilizing in recent months. However, we need to see some upward momentum to consider allocating broadly to EAFE over SPX. In absolute terms, EFA has significant resistance in the range just above current levels. $75-$76 is the target from the recent inverse head and shoulders, this year’s summer highs, and broken support from early 2022. I welcome the short-term momentum, but all that makes this a challenging entry point.

EEM: MSCI Emerging Markets ETF

Emerging markets are drifting sideways to slightly lower and making fresh 52-week lows vs. the S&P. Nothing to do here but avoid it.

EAFE vs. EM